Summary
- Taking on a more definite shape after the beginning of the Russia-West proxy war over Ukraine, the world seems to be fragmenting into two opposing camps.
- So far this year, the US has done reasonably well, but its main allies lost about $1.5 trillion collectively in terms of GDP. The likes of Russia and Iran gained.
- Next year could get worse unless we de-escalate, especially for Western Europe, with the US economy also suffering indirectly from having to prop up vulnerable allies.
- With allies perhaps on the brink of economic collapse and major opponent markets potentially closing for US multinationals, we could be looking at a very tough decade for investors unless we see a truce.
- My strategy for navigating through the challenging investment environment is to lean heavily into cash, gold, and commodities. Overall, much higher risk needs to be factored into all valuations.
For further details see:
Economic WW1: Investors Potentially Face A Lost Decade