Editor’s Note: If Wall Street had a mood ring, it would be glowing an angry shade of red right now. The stock market, jittery at the best of times, is now reeling from an unholy trinity of fear: political chaos, resurgent inflation, and a president-elect with ideas so outlandish they’d make a reality show producer blush.

Welcome to 2025, folks. The market correction you’ve been dreading? It might be here. Below, I explain how to hedge your portfolio.

Trade Wars, Inflation, and Geopolitical Lunacy

President-elect Donald Trump has been making waves—and not the good kind. Between vows of a trade war, musings about annexing Canada (a “hostile takeover,” anyone?), and the bizarre ambition to rename the Gulf of Mexico the “Gulf of America,” Wall Street is understandably spooked. Add to that a promise to buy Greenland (because apparently, real estate speculation scales), and you’ve got the makings of a geopolitical circus.

Investors are already feeling the heat. The twin specters of tax cuts and tariffs loom large, both inflationary nightmares that could send consumer prices soaring. Treasury yields are on the rise, and if you remember your Economics 101, rising yields are a death knell for frothy equity valuations. Tech “story stocks”—those beloved darlings of the FOMO crowd—are particularly vulnerable.

Elevated Valuations and the Comeuppance for FOMO

Let’s talk about valuations. The stock market has been living in a bubble bath, with tech stocks so overvalued they make tulip mania look rational. Companies with a dubious chance of making a profit have been commanding sky-high prices. Why? Because investors hate missing out.

But the bubble’s about to pop, and the FOMO faithful are about to get a harsh dose of reality. It’s a market comeuppance so overdue it should be paying interest.

Hedge Your Bets: Surviving 2025

So, how can you protect your portfolio from the madness ahead? Here’s a blueprint for hedging against trade war chaos, runaway inflation, and an incoming president whose mercurial policy proposals read like an Onion headline:

1. Bet on Commodities Inflation’s best friend is commodities. Gold, silver, and even agricultural goods like wheat and corn are your new best friends. They tend to hold their value—or even rise—when inflation rears its ugly head. Consider exchange traded funds (ETFs) like the Invesco DB Commodity Index Tracking Fund (DBC).

2. Buy Bonds (But Be Choosy) Rising Treasury yields might tank stocks, but they also make bonds more attractive. Stick to shorter-duration bonds to avoid getting burned if yields continue to climb. TIPS (Treasury Inflation-Protected Securities) are another solid play.

3. Invest in Inflation-Proof Stocks Look for companies with pricing power—think utilities, consumer staples, and healthcare. These sectors can pass rising costs onto consumers, preserving their margins and your returns.

4. Short the Frothy Tech Sector If you’re feeling adventurous (and perhaps a tad vindictive), consider shorting overvalued tech stocks. The story stock bubble is ripe for popping, and the profits from short positions could be your silver lining.

5. Diversify Globally With the U.S. looking like it’s about to implode politically, overseas markets could offer a safe haven. Europe’s stability (relatively speaking) and Asia’s growth potential make international ETFs worth considering.

6. Keep Cash on Hand Cash may not be sexy, but it’s the ultimate hedge. When markets go haywire, having liquidity allows you to pounce on bargains.

As we brace for 2025, let’s not lose our sense of humor. After all, when the president-elect is suggesting we rename a major body of water, the absurdity writes itself. And while we can’t predict every twist and turn in this chaotic drama, we can prepare our portfolios for the turbulence ahead.

In the immortal words of Mark Twain, “History doesn’t repeat itself, but it often rhymes.” The rhyme of 2025? Chaos, inflation, and market correction. Make sure you’re not singing the blues.

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John Persinos is the editorial director of Investing Daily.

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