Trade War 2019: How Smart Investors are Protecting their Portfolios

September 12, 2019, By smallcapfirm,

Investors are in panic mode over the trade war.

Not only will new 10% tariffs on $800 billion worth of Chinese imports go into effect in just weeks, China just stopped buying U.S. agricultural products.

Now comes word that President Trump is “not ready for a deal” with China.

In fact, he just noted the U.S. will cut ties with Chinese telecom giant Huawei. But that could change if there’s a trade deal with China. That move came after China stopped buying U.S. agricultural products, which was retaliation against the new 10% tariffs.

Unfortunately, things may only escalate from here.

The President just said, “We’ll see whether or not we keep our meeting in September. If we do, that’s fine. If we don’t, that’s fine,” as quoted by Politico.

However, even in times of chaos, it never pays to panic.  Instead,  here are some of the top ways to protect yourself and your portfolios.

Tip No. 1 – Have Discipline

When markets fall apart, we tend to get a bit emotional. Logic goes right out the window.  Discipline means holding on to good stocks, even if they move lower. It also means avoiding the desire to make speculative, risky bets hoping to break even.

We have to remember that markets are resilient. They don’t stay down for long.  Also, be willing to see out the “blood in the streets” trades.  When markets crash, investors are typically presented with outstanding buy opportunities in oversold stocks that no one else wants to touch.

In short, remain calm and focused. Don’t sell out of panic. Just sit tight.

Tip No. 2 – Consider Buying Precious Metals

When markets turn south, investors typically flock to precious metals like gold and silver. Therefore, it’s always wise to keep a small percentage of your portfolio in precious metals as a hedge for a potential market meltdown.

Given the fact that precious metals act as a great form of insurance against global chaos and stock market meltdowns, it’s one of the safer tools. Gold, for example, will increase in price in response to any number of potential events; major uncertainty; a decrease in the value of the dollar.

Tip No. 3 – Be Well Diversified for Volatility

Some investors,  betting on higher volatility will turn to:

  • iPath S&P 500 VIX Short-Term Futures (VXX)
  • ProShares Ultra VIX Short-Term Futures (UVXY)
  • VelocityShares Daily 2x VIX Short-Term ETN (TVIX)

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