SFM - Defensive Stocks For Unpredictable Trump Policy

2025-03-20 11:20:33 ET

Summary

• President Trump's unpredictable policies, especially the global tariff war, have led to significant market volatility and economic concerns, with the Nasdaq 100 down 14%.
• Defensive stocks, bonds, and gold are essential in an all-weather portfolio to navigate the Trump era's economic uncertainties and potential stagflation or recession.
• Top defensive sectors include Healthcare, Utilities, and Consumer Staples, which have shown strong performance in 2025, offering stability amidst market turmoil.
• High-income, high-risk investments are underperforming; focus on defensive equities like Johnson & Johnson, Pepsi, and Berkshire Hathaway for portfolio resilience.

President Trump has finished his first 50 days in office. It has been a whirlwind of activity, but mostly days and weeks of unpredictability. Many would say it has been 50 days of chaos. The stock markets would agree. The markets initially cheered the idea of a Trump Presidency due to the potential for ongoing tax cuts, much-needed deregulation and the tightening up of the U.S. / Mexican border. In 2025, the S&P 500 initially rose 4.2% by mid-February. But then, Trump unleashed an on-again off-again global tariff war that appeared not to be anchored to any long-term economic strategy. The markets rebelled angrily, moving into correction territory. The growth-oriented Nasdaq 100 is down 14% from its recent peak. The pace of decline was also quite notable. The fifth-fastest correction in the past 75 years. The markets are speaking - loudly.

There is little to debate, a global tariff war is a very bad and unwelcome economic event. The last time it was "tried" the Depression was made much worse than it needed to be. The Smoot-Hawley Act increased tariffs on imports to the U.S. by about 20%. Most countries responded with their own tariffs on American goods. Global trade plummeted, contributing to the ill effects of the Great Depression. ...

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