Surfing the US Debt?

It’s not without apprehension that I wonder what investors should do when faced with the unsustainable US government debt our Trump Congress recently endorsed and what are the best strategies, if any, available at the moment? 

When I stare into the “black hole” of unsustainable US government debt, I remind myself to adapt with foresight instead of panicking. For one thing, I should make sure to diversify beyond traditional assets by looking at gold, commodities and carefully watching currency debasement.

Since cryptocurrencies aren’t my cup of tea, I’ll pass on these ones. In terms of equities, I should prefer to go global and reduce my exposure to US risk by investing instead in international markets with stronger fiscal positions. 

There and in the US, I should favor industries that benefit from fiscal spending (defense and AI) while avoiding those sensitive to interest rate hikes. As for cash positions, I should prioritize shorter duration bonds and pass on long-term treasuries as these might be vulnerable to rising rates. 

Another good strategy might be to consider exposure to currencies from countries with lower debt-to-GDP ratios (Northern Europe, Switzerland, Australia). 

My portfolio should be flexible enough and move beyond the classically recommended splits. More equities, real estate, and alternatives might hedge me against fiscal realities. Bottom line is that I should think long-term, act proactively and look for tax-efficient investing: Rising debt may lead to higher taxes, another good reason to use tax-advantaged accounts and strategies. Finally staying informed is key by watching debt-to-GDP trends, interest rate shifts, and policy changes. 

The tipping point may be gradual, but preparation is essential!