There is ongoing uncertainty regarding how tariffs will affect corporate earnings, leading to a generally bearish sentiment among investors (AAII 58%). The S&P 500 and NASDAQ are trading below their 200-day moving averages, indicating a higher-risk market environment. Effective risk management is critical for long-term financial success, and I am not willing to risk my savings on the belief that the market will always rise. My focus is on managing risk to avoid potentially life-altering losses. Ultimately, only God knows what the future holds, and I seek His guidance daily, trusting in His wisdom. When the market rewards me, I stay invested, but I hedge or sell when risks are high. I take full responsibility for my investments, knowing no one cares about my money more than I do. All my investable assets are in my Fund, and if you’d like me to manage your money as I do my own, consider investing in my Fund to share the same returns.
My portfolio comprises 15% in a gold ETF that holds physical gold, two gold stocks (5% each), and one software stock (1%), showing strong earnings and sales growth with solid charts. The once-popular “Mag 7” stocks have now become the “Lag 7” as large investors pull back. I believe the market will find a bottom once analysts gain more clarity on the effects of tariffs. Gold could serve as an early signal that inflation is rising while the economy slows (stagflation).
Fed Chairman Jay Powell has stated that tariff-induced price increases will be “transitory,” which could be an attempt to use tariffs as a scapegoat for inflation. Quantitative Tightening (QT) will slow from $25 billion to $5 billion monthly starting in April, with Powell forecasting two more rate cuts this year. The Fed has already reduced its COVID-era balance sheet by 25%, from $9 trillion in April 2022 to $6.7 trillion. Powell plans to allow mortgage bonds to “roll off” and purchase Treasuries, signaling a return to quantitative easing (QE). With $28 trillion of the $36 trillion national debt maturing in the next four years, the Fed is preparing to buy more Treasuries to support the bond market as global confidence in America’s ability to repay its debts wanes. As central banks grow more concerned about America’s high debt-to-GDP ratio (over 120%), they increasingly turn to gold, reflecting a broader loss of faith in fiat currencies. Gold is now at an all-time high ($3,025/oz), while the dollar has lost 98% of its purchasing power since Nixon took us off the gold standard in 1971. The Fed creates money and credit out of thin air, leading to inflation and rising prices that seldom decrease. Growth stocks with accelerating earnings and sales may offer some protection against inflation.
Fiat money, which relies on government taxation and debt repayment, is inherently fragile. History has shown that all fiat systems eventually collapse, and nations with the most gold will likely have the most trusted and resilient currencies. I believe the collapse of the fiat system is likely to occur within the next 10 years, so I prioritize risk management to protect my assets from potentially life-altering losses. Wishing you the best returns. Grace & Peace!
If anyone lacks wisdom, ask God, who gives to all generously and without reproach. James 1:5
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Dexter Lyons, Portfolio Manager
337-983-0676, ChristianMoneyBlog.net
100% BRI, Honoring God with Our Investments!
Actively Managing Risk Since 1990!