While the US should still attract some second-tier allies, Trump thus far appears isolated and compelled to “go it alone,” perhaps a karmic response from the allies he has spurned together with his tariffs and global trade war.
For a comprehensive overview of recommendations from 14 investment advisors and business owners within the US, see the current blog on my website, coordinated by Featured.com on LinkedIn. In the limited space available for this column, I even have included Canadian contributions from 4 well-known domestic financial professionals.
Don’t let geopolitics torpedo your plan
Typical of the Featured.com blog is that this comment from an advisor who warned against making major asset allocation changes on account of geopolitical events like Iran: “Major structural changes are rarely advisable for fixed income investors because they can introduce timing risk,” said Dennis Shirshikov, head of growth and technology at Growthlimit.com
“A more disciplined approach is to consider whether the portfolio already has defensive characteristics such as income-producing assets, diversified sectors and a stable allocation to fixed income. When these fundamentals are in place, geopolitical events tend to have less impact on long-term outcomes. Investors often benefit more from maintaining diversification and liquidity than from attempting aggressive repositioning during uncertain times.”
Or as one other source aptly put it: “For most retirees, this is more of a moment of rebalancing and defense than a reason to overhaul the portfolio.” Finally, investment banker Oliver Bogner of Advisory Investment Bank describes his key defensive move as “a barbell: maintain high-quality equity exposure, but combine it with explicit ‘shock absorbers’ that do not purport to predict war.”
His recommendations for exchange-traded funds (ETFs) include “GLD [invested in gold bullion] as an insurance cover for energy/war risks and XLU [utilities] for the boring cash flow bias; I size them small enough so that they help with stress but don’t take over the entire portfolio.”
What Canadian consultants say
Former consultant and blogger Dale Roberts is now turning to a more Canadian perspective provided by local experts and recently authored this excellent book Blog in regards to the specter of stagflationwhich is an insidious combination of reduced growth and rising inflation. The Most worthy of his many suggestions could also be his deal with maintaining an “all-weather portfolio” that covers all 4 possible economic quadrants: inflationary growth, disinflationary growth, stagflation and deflation/recession.
Certified financial planner John de Goey, a portfolio manager at Toronto-based Designed Securities, was increasingly pessimistic long before the Iran war. “I absolutely believe the world has changed,” De Goey told me in an email exchange. “Not only has the rule of law given way to brazen self-interest (both military and economic), but this change has also caused what the Prime Minister did.” [Mark Carney] called a break.”
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In short, De Goey believes: “It would be foolish to pretend that nothing significant has changed.” De Goey says that Operation Epstein Fury’s mission appears to have failed, “if it ever had one.” Israel incited the United States into an avoidable war with no apparent goal or end. As a result, “energy inflation will lead to general inflation, economic stagnation… and a major global recession.” He agrees with Roberts that “the stagflation of the 1970s is likely to return.” In view of the still high stock valuations, he doesn’t rule out a possible depression. By any reasonable measure, “the economy is now in worse shape than it was during the last outbreak of stagflation.”
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De Goey notes that the S&P CAPE ratio is currently at 38, the Buffett indicator is near 220, and gathered American debt is greater than $39 trillion. In addition to the worldwide market chaos, Canada also has to take care of the CUSMA trade negotiations and the possible cancellation of this contract. “Starting with the ‘Liberation Day’ tariffs and continuing into 2026, trade alliances have splintered and new ones must be built at lightning speed to make up the shortfall. Times are getting tougher.”
De Goey suggests that retirees and retirees nearing retirement may consider reducing their exposure to traditional financial assets (particularly U.S. stocks and bonds); take a more defensive approach to strategic asset allocation; Consider transitioning to more retirement-focused approaches to portfolio construction. and use more inflation-friendly assets (gold, materials, infrastructure – perhaps 10% each). He would also explore unusual but unrelated assets in growth industries or those with moats, equivalent to clean energy and music licensing.
The duration of the war is unknown
The unanswerable query is how long the Iran conflict could drag on, says Matthew Ardrey, senior financial planner at Toronto-based TriDelta Private Wealth. That, in turn, affects how portfolios have to be managed: “If it’s just a few weeks or a few months, things could normalize on their own with little long-term impact on the economy. If it starts to drag on for months, or worse, longer, then the impact will be felt across the broader economy.”
Car owners are already seeing higher prices on the pumps, and in the long run rising transportation costs will impact the costs of all goods, including food. Since oil is utilized in the manufacture of many products, there may be a “real risk of inflation”.
Investors still in the buildup phase could see setbacks in Iran as proverbial buying opportunities. If so, Ardrey suggests stocking up on large, solid corporations “that are designed to weather the storm. The lower the markets, the better chance you have of buying and getting higher returns over the long term.”
The situation is tougher for older investors who live off their assets. “I hope they don’t need to make major changes to their asset allocation or underlying investments because their portfolio was constructed correctly from the start. If not, there’s still time to make changes,” says Ardrey.
Despite last month’s negative performance, most investors are still more likely to have positive returns from the strong markets of recent years: “This will allow them to make changes without having to accept permanent portfolio losses.” Indeed, the five-day reprieve that Trump granted Iran on the morning of March 23 can have been one such opportunity for rebalancing. This is one other example of the “TACO trading” coined by Wall Street: Trump at all times shies away. That means buying when Trump causes markets to crash and selling after he reverses course and stocks bounce back. (Until he stops making TACOs. How lucky do you’re feeling?)
