Investors cannot be complacent in light of possible trade war
As the United States president moves in the direction of a potential global trade war, it’s essential that investors do not become complacent.
With the trade tensions mounting between the U.S. and China, markets all over the globe are sliding. The apprehensions deepened after it was revealed that Mr Trump is getting ready for a new clampdown on Chinese investments in the States.
Up to now, the markets have been somewhat blasé in regard to the increasing tensions in recent months between the two biggest economies.
That said, as the Trump administration lays out more and more aggressive restrictions on what they view as China’s unfair trade practices, and of course because the President is attacking trade on all fronts – even traditional allies to the U.S. – the fears are now far more defined.
Over the past few weeks, Mr Trump has been highly vocal about most major asset classes and most parts of the world. Therefore, if investors are attempting to grow their wealth, they must avoid complacency at all costs.
It’s vital that they make sure their portfolios are suitably diversified.
As we’ve seen over time, diversification is the most effective way for investors to mitigate risks and also make the most of buying opportunities that present themselves during times of market volatility.
In all likelihood, President Trump’s pompous tactics are simply negotiating strategies, and he will not cause any disruption to trade patterns.
Nevertheless, because of the scope of a possible fall-out of a trade war on global trade and growth, it’s important that investors actively seek to review and rebalance their wealth portfolios.
Investors need to prepare themselves for months of intensified posturing from the various parties, which will probably lead to more market turbulence.
As a Trump-driven trade war looks ever more likely, a good fund manager can assist investors in circumventing risk and welcoming potential opportunities.