Editor’s Note: Think of the climactic scene in The Planet of the Apes, where Charlton Heston falls to his knees in despair before the ruined Statue of Liberty. Trump’s return to power could similarly upend the political and financial landscape, leaving only fragments of the old order.

Judging by the dire headlines lately, it’s time to build a “doomsday portfolio.” Below, I’ve outlined five crises that could erupt in the coming months, along with proactive strategies to keep your money from getting caught in the carnage. If you follow these steps, you’ll stand a better chance of not only surviving, but also thriving.

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Bracing for The Next “Black Swan”

Let’s start with a quote by a bestselling writer, financial mathematician, and former Wall Street options trader. This man coined the term “black swan.”

“It has been more profitable for us to bind together in the wrong direction than to be alone in the right one. Those who have followed the assertive idiot rather than the introspective wise person have passed us some of their genes. This is apparent from a social pathology: psychopaths rally followers.” — The Black Swan: The Impact of the Highly Improbable (2007), by Nassim Nicholas Taleb.

Here are the five conditions that could give rise to a black swan in the coming months, with advice on how investors can leverage the potential chaos.

1. Trade War Redux

Remember the tit-for-tat tariffs of Trump’s first term? Well, get ready for the sequel. Trump’s protectionist instincts haven’t mellowed, and his “America First” policy is generating a new wave of tariffs and sanctions.

Just hours after his inauguration speech on January 20, Trump announced he planned to implement 25% tariffs on products from Mexico and Canada starting on February 1.

China is expected to soon get similar punitive treatment from the White House. The threat of Trump’s tariffs on $500 billion worth of Chinese goods looms large, as the world’s second-largest economy already struggles with slowing growth.

Expect retaliations, snarled supply chains, and skyrocketing costs for everything from iPhones to avocados. The stakes are high. The top three purchasers of U.S. goods exports in 2022 were (in order of amount) Canada ($356.5 billion), Mexico ($324.3 billion), and China ($150.4 billion). The following chart, released December 2024 and compiled with the latest available data, tells the story:

While the intent behind tariffs is to protect domestic industries, historically they’ve always resulted in higher costs for companies and consumers and have negatively affected overall economies. Most economists consider the tariffs imposed during Trump’s first term to have been a failure that roiled international relations and made goods more expensive.

Proactive Move: Investors can hedge against the fallout by focusing on companies with minimal reliance on global supply chains. Look for domestic manufacturers and service companies that benefit from reshoring trends. Exchange-traded funds (ETFs) like the Invesco S&P SmallCap 600 Pure Value ETF (RZV) could capture opportunities in the heartland of American industry.

2. Deregulation Free-for-All

Trump’s mantra has always been “cut the red tape,” and his second term will launch a blitzkrieg on regulations across energy, finance, and environmental sectors. This war on regulations has already started.

While a wave of deregulation might initially boost profits for certain corporations, the long-term consequences could be catastrophic: oil spills, financial instability, corporate fraud, and climate disasters will all be waiting in the wings.

Without government oversight, industries may fail to self-regulate effectively, leading to monopolies, anti-competitive behavior, and market failures. Deregulated markets may favor larger companies, squeezing out competition and raising prices for consumers.

In financial markets, deregulation can lead to excessive risk-taking, as seen during the 2008 financial crisis. Without adequate regulation, financial institutions may engage in speculative practices that increase systemic risk and lead to economic downturns.

Proactive Move: Bet on sectors that could capitalize on deregulation while hedging against its consequences. Energy companies like ExxonMobil (NYSE: XOM) might see a short-term rally, but don’t ignore renewable energy plays like NextEra Energy (NYSE: NEE).

Consider funds that thrive on the green energy transition, such as the iShares ESG Aware MSCI USA ETF (ESGU). Fossil fuels may enjoy favored political status at the moment, but the transition to green energy is a megatrend with unstoppable momentum.

3. Turning Monetary Policy into a Circus

One of Trump’s favorite whipping boys has been the Federal Reserve. During Trump’s second term, expect relentless pressure on the Fed to keep interest rates artificially low, regardless of inflation risks. This interference erodes investor confidence in the Fed’s independence, destabilizing the bond market and the broader economy.

Let’s revisit Trump‘s first term and look at all the times he personally insulted Fed Chair Jerome Powell, his own appointee to the lead the U.S. central bank. (Powell is a Republican, by the way.)

According to Trump: Powell had “let us down.” The central bank chief was “clueless.” Powell suffered from a “horrendous lack of vision.” There was a sports analogy: “He’s like a golfer who can’t putt, has no touch.” Then came this gibe: “My only question is, who is our bigger enemy, Jay Powell or Chairman Xi?” Trump also blasted Powell and his Fed colleagues as “boneheads.”

Whenever Trump attacked the Fed, the markets wobbled. Will the Fed fall within Trump’s crosshairs again? Count on it.

In fact, on January 23, Trump said that he’ll “demand that interest rates drop immediately.” Overt interference by the White House on monetary policy tends to make Wall Street very nervous.

Proactive Move: To shield your portfolio from monetary policy chaos, consider inflation-protected securities like Treasury Inflation-Protected Securities (TIPS). ETFs such as the iShares TIPS Bond ETF (TIP) offer a convenient way to hedge against runaway inflation. Gold and other commodities, which are long-time safe havens, could also thrive in this environment. The benchmark ETF SPDR Gold Shares (GLD) is a solid choice.

4. Geopolitical Pyromania: Burning Bridges

Whether it’s withdrawing from global alliances, alienating NATO, or sparking new tensions with North Korea, the risk of geopolitical crises is high. Markets loathe uncertainty, but we’re about to get it on the world stage. Meanwhile, the Russia-Ukraine war and Middle Eastern conflict rage on.

The United States is the largest military spender worldwide, surpassing the combined budgets of the next nine countries and spending more than three times that of the second-largest spender, China.

WATCH THIS VIDEO: How The New Cold War Fuels Commercial Aerospace Growth

If anyone tries to tell you that the U.S. military is “hollowed out,” they’re dead wrong. NATO, initially perceived by some as an outdated relic of the Cold War era, has experienced renewed purpose and expansion. The alliance recently welcomed new members, including Finland and Sweden, to counterbalance Russia’s revanchism.

The economic and military ripple effects of this renewed rivalry are profound. Defense budgets around the world have ballooned, particularly in Europe, as nations seek to modernize their forces and enhance readiness.

For its part, U.S. defense spending has consistently trended upward. In 2025, U.S. defense expenditures are projected to reach an unprecedented $850 billion. Approximately 25% of the total defense budget—roughly $212.5 billion—will be devoted to aerospace, primary for advanced aircraft.

Proactive Move: Defense contractors and cybersecurity firms typically benefit from heightened geopolitical tensions. Aerospace/defense companies like Lockheed Martin (NYSE: LMT) and cybersecurity providers like Palo Alto Networks (NSDQ: PANW) are positioned to thrive in a world on edge. Also look for gold and other crisis-safe investments to weather geopolitical storms.

5. Budget Bedlam: A Fiscal Free-For-All

A hallmark of Trump’s governance is his love for debt-fueled spending, whether on tax cuts, defense budgets, or infrastructure. Pair that with potential government shutdowns over partisan gridlock, and you’ve got a recipe for fiscal disaster. Ballooning deficits and mounting national debt could spook the bond market, sending interest rates soaring.

Indeed, the 10-year U.S. Treasury yield, a bellwether of Wall Street’s economic outlook, has been trending higher. That’s because the bond market smells trouble on the horizon.

Rising bond yields and stock prices often move in opposite directions, and the reasoning is simple. When bond yields rise, borrowing costs increase for corporations, squeezing profit margins.

The recent spike in yields isn’t just a response to immediate inflation concerns; it’s a preemptive strike against the potential for long-term economic instability.

Proactive Move: Protect yourself from the fallout of fiscal irresponsibility by diversifying into non-dollar-denominated assets. Emerging market funds, particularly those focusing on countries with stable economic policies, can provide a hedge. Consider the Vanguard FTSE Emerging Markets ETF (VWO) or allocate a portion of your portfolio to cryptocurrencies like Bitcoin (BTC) if you have the stomach for volatility.

The Silver Lining: Chaos Is Opportunity

Chaos breeds opportunity for those who stay calm and think strategically. Remember, the best investors aren’t those who panic but stay dispassionate. When’s a good time to buy? When there’s blood in the streets (figuratively, we hope).

Now…not later…is the time to stress-test your portfolio. Identify vulnerabilities to tariffs, inflation, or geopolitical instability, and adjust accordingly. Diversify across asset classes, sectors, and geographies. Keep some dry powder (cash) ready to pounce on bargains when the inevitable pullbacks occur.

By just about every valuation metric, the stock market is overvalued and overdue for a correction.

Consider the time-tested wisdom of super-investor Warren Buffett, who said: “Widespread fear is your friend as an investor because it serves up bargain purchases.” Never panic during a sell-off. Not only will the market eventually bounce back, but it will do so a lot sooner than you might think.

Buffett doesn’t necessarily wait for the market to eventually reward the merits of underappreciated stocks; he chooses stocks according to their potential as companies. He looks for strong balance sheets, good products that people need, market domination, and high-quality management. He emphasizes long-term ownership of a company, not just the chance for capital appreciation based on temporary market dynamics.

Also consider this Wall Street adage: “Bulls make money, bears make money, pigs get slaughtered.” Don’t be a pig in 2025. Be a savvy, dispassionate opportunist who sees crises not as disasters but as investment opportunities in disguise.

The upshot: Pursue wealth-building with mental discipline, one step at a time. The five steps outlined above will help you strike the right balance between growth and risk-mitigation.

Got an opinion or a question? I’d love to hear from you. Send me an email: mailbag@investingdaily.com.

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John Persinos is the editorial director of Investing Daily.

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