Two ideas to survive in the stock market in case of a severe trade war

Financial markets are currently in midstream and nobody can predict with certainty in what direction they will decide to cross their support or resistance lines. As trade tensions accumulate between the United States on the one hand, and China and the European Union (EU) on the other hand, it is very difficult for the investor to know what decision to make.

While it is probably not appropriate to “sell everything” and yield to the pessimistic sirens of those who see a stock market crash at the slightest spark, it is nevertheless strongly advised to regularly review the composition of one’s portfolio, except for those totally invested in very long-term index funds like the Vanguard 500 Index Fund Investor Shares (VFINX).

Remember also the current stock market environment which, although sluggish since the beginning of 2018, still performs at historic levels, particularly in the United States where the Dow Jones Industrial Average (DJIA) still hovers at more than 24,000 points (against 15,000 points in 2013) and the Nasdaq Composite (IXIC) at more than 7,400 points (against 3,400 points in 2013).

For now, analysts including Cyceon believe that the current tensions described as a “trade war” by the media are mainly negotiating tools used by Donald Trump with a view to reaching a favorable agreement with the United States trading partners, China in priority.

However, a severe trade war cannot be ruled out, so perhaps two more conservative types of investment should be considered.

First, the very large companies producing consumer goods with very high notoriety, appropriately valued on the stock market and distributing dividends each year for several decades, for example Coca-Cola (KO). Then an index or a fund of SMEs, especially American, which produce basic goods and consumer goods, appropriately valued and distributing dividends each year for a long time, for example Schwab U.S. Small-Cap ETF (SCHA).

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