I haven’t had time to write too many posts because I am fighting fires set by this new crazy administration. Last year, I wrote a post entitled, “Diversification is 2024 theme: Banking, Health, Tech, Everything” and that was based on all the cyber security and related incidents throughout the year. This year, it seems every few hours of the day brings some new government policy that is creating some kind of uncertainty or volatility so I have to re-think my risk mitigation especially for my investment portfolios.
Let’s take a look at some of the changes this year so far.
Stocks
While I have a diversified portfolio of stocks, my normal covered call strategy to squeeze extra income out of my holdings has become too volatile so I switched to a collar strategy for now. I am invested in small caps, cash and energy because I consider those safe havens but there are no guarantees.
Bonds
The President is on record saying that he may not honor some of the federal bonds issued by the U.S. government so now I’m loading up on municipal bonds because those are paid for by cities, counties and states. It doesn’t bode any vote of confidence that the debt ceiling is going up by $4 trillion either.
Real Estate
I am not sure whether to continue building my real estate portfolio, continue to leave it as is, or liquidate and switch investments to something else. The growing cost of insurance, maintenance and property taxes have me deeply contemplating what I will need to do but for now, the big question is how do I risk mitigate a deep recession with renters not having a job to pay the rent?
Gold & Precious Metals
I actually wrote a post about gold here almost one year ago and now I am doubting whether I should sell any of it given the new world we’re living in now. It’s likely I’ll just hang on to the little gold I have and wait and see what happens. It’s a great way to manage currency risk.
Currencies
Speaking of currencies, I continue to hold foreign currencies including Swiss Francs and Euros in my investment portfolio and I am seriously considering adding more in the near future.
Bitcoin
I added a small amount of bitcoin to my portfolio with this correction and I’m thinking of adding more as a hedge.
Cash
Call me paranoid but I may take some money out of the bank and stuff it under my proverbial mattress. If bank defaults are going to happen, it will likely be this year or early next year. There are huge amounts of commercial loans that are coming due this year and next so unless the banks come up with some new scheme to sweep losses under the rug, things could get ugly.
Smorgasbord
I also went back and looked at my comprehensive list of financial instruments to see if there was anything else I should be investing in or hedging. I also asked AI to help risk mitigate a portfolio during tariff and trade wars. I have been busy researching items on the lists but as soon as I make a move, I’ll write a post about it.
Share The Wealth
Are you implementing risk management strategies with your investment portfolio in this new administration paradigm? Let me know in the comments below.
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