Editor’s Note: The following analysis doesn’t play favorites with donkeys or elephants, nor does it serve Kool-Aid of any ideological flavor. This is a market-minded survival guide for those trying to navigate today’s political-induced chaos, with their retirement savings intact.

Below are five risk-reduction moves that keep you invested but also protect you from calamity.

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Tariff tantrums…

Whether you wear a red hat, a blue tie, or just want your 401(k) to make it to the other side of this political demolition derby, you probably already sense that things in Washington have taken a sharp turn toward the absurd.

Case in point: On May 29, a federal appeals court lifted one of two rulings that had blocked President Trump’s beloved tariffs, only hours after a lower court rejected the administration’s legal arguments.

In the soap opera of Trumpian trade policy, this was just another “on-again, off-again, on-again” moment that left business leaders, consumers, and investors clutching their spreadsheets and anxiety meds.

While one court ruling delivered a temporary victory for the president’s protectionist crusade, another ruling in D.C. still blocks key tariffs, for now. But in this legal whack-a-mole, it’s not the rulings themselves that matter most. It’s the utter unpredictability of it all. The only thing consistent about Trump’s policy is the inconsistency, and markets hate inconsistency the way cats hate baths.

At the same time, a sweeping new budget bill, which squeaked through the bitterly divided U.S. House by just one vote, combines upper-class tax cuts with bottom-shelf austerity, prompting even middle-of-the-road economists to sound the alarm about widening deficits.

The bond vigilantes ride again…

Who are these so-called vigilantes? They’re institutional investors and hedge fund managers who punish irresponsible fiscal policy by selling off bonds, pushing yields higher and thereby increasing borrowing costs across the economy. They’ve already started to rebel against D.C.’s fiscal fantasyland.

The yield on the 10-year U.S. Treasury has spiked to around 4.42%, putting pressure on equities, housing, and any other asset dependent on cheap money.

Meanwhile, the CBOE Volatility Index (VIX), the market’s fear-o-meter, is hovering near 20, which signals elevated stress on Wall Street. Investors who think this is just noise are like Wile E. Coyote running off a cliff: the legs keep pumping, but gravity eventually wins.

Inflation and the Fed…

Tariffs, by design, raise the price of imported goods. The Federal Reserve, ever the cautious chaperone at wild parties, has taken a step back. No more rate cuts. No more free punch bowl. Jay Powell and company are clearly worried about renewed inflationary forces and they refuse to bail out these policy shenanigans, no matter how much arm-twisting the president applies. We’re starting to hear a dreaded word again: stagflation.

Add to this an international tableau that resembles a deleted scene from Dr. Strangelove.

Russia continues to chew up Ukraine while the West wrings its hands over the carnage; the Middle East is imploding in usual fashion, but louder; China is sharpening its knives over Taiwan; and Trump is taking a sledgehammer to NATO while picking fights with…Canada?

Yes, Canada. Our placid, maple-syrup-loving neighbor to the north is now being treated like a rogue actor.

When the greenback sneezes, the world catches cold…

The U.S. dollar, long the global safe haven, is now under pressure too. Foreign investors, who already need a flowchart to follow American trade policy, are losing confidence.

A weaker dollar means higher import prices, more inflation, and increased costs for servicing our enormous pile of national debt. If you’re wondering why gold is rising again, now you know.

Recession risk is rising, too. In the first quarter of 2025, U.S. real gross domestic product (GDP) contracted by 0.3%. This decline reflects the ongoing impact of trade disruptions stemming from Trump-era tariffs, combined with spending cuts implemented by the Department of Government Efficiency (DOGE).

The following graphic illustrates the seasonally adjusted annualized advance estimates of U.S. real GDP growth by quarter since 2021, based on data from the U.S. Bureau of Economic Analysis (BEA). The chart breaks down the -0.3% Q1 2025 GDP change, highlighting the individual components that contributed to the overall contraction:

The non-hack economists (i.e., the ones not on TV shouting about “liberty!” while flogging gold coins) are seeing the writing on the wall. Or rather, they’re seeing the earnings revisions, the inverted yield curves, and the sharp decline in new orders from the manufacturing sector.

What’s an Investor to Do?

Despite this carnival of chaos, long-term investors should not panic. Repeat: Do not panic. Historically, markets have always bounced back from political insanity, economic shocks, and even world wars. But in the short and medium term, it’s wise to adjust your sails before the gale hits.

Here are five “defensive growth” strategies to protect your portfolio:

1. Embrace Quality Dividend Stocks

Increase your portfolio’s allocations to companies with strong balance sheets, durable business models, and a long history of weathering storms. They provide income and stability, like a financial security blanket.

The so-called “Dividend Aristocrats” always provide a fertile hunting ground for investors. To earn the honorific Dividend Aristocrat, a company must typically have raised dividends for at least 25 years.

These dividend powerhouses constitute the S&P 500 High Yield Dividend Aristocrat Index, an official index of the 50-plus highest dividend yielding stocks in the S&P Composite 1500. This Aristocrat Index is maintained by Standard & Poor’s, which every December updates the list of companies that make the grade.

2. Allocate to Short- and Mid-Term Treasuries

Higher yields mean safer returns on government bonds. Stay in the 1–5 year range where you’re less exposed to inflationary surprises or policy reversals. Think of it as renting a financial bunker.

Investing in bonds with maturities ranging from 1-5 years is a widely adopted strategy among investors who aim to strike a balance between generating steady income and minimizing exposure to market volatility.

These short- to intermediate-term bonds typically offer more stability than long-term bonds, because they are less sensitive to interest rate fluctuations. At the same time, they tend to provide higher yields than ultra-short-term instruments like Treasury bills or money market funds, making them an attractive option for conservative investors seeking reliable returns without taking on excessive risk.

3. Add Gold or Commodities Exposure

No, not because Glenn Beck said so. Gold and certain commodity-linked exchange-traded funds (ETFs) can provide ballast when the dollar weakens or geopolitical shocks rattle equity markets.

If you’re risk averse and want an easy and safe way to increase your exposure to the Midas Metal, consider the SPDR Gold Trust (GLD).

Launched in 2004, the SPDR Gold Trust was the first gold ETF available in the U.S. GLD seeks to replicate the performance, net of expenses, of the price of gold bullion. GLD is considered the benchmark for gold.

You can leverage the global food shortage and simultaneously hedge your portfolio against rising inflation, by placing the Invesco DB Agriculture Fund (DBA) in your portfolio’s hedges sleeve.

A pure play on basic food products, DBA is an ETF that holds futures contracts on such agricultural commodities as corn, wheat, soybeans, cocoa, coffee, sugar, and cotton. These contracts are rolled over before expiration to maintain exposure.

4. Stay International (but Selectively)

Don’t abandon global diversification; just be strategic. Developed markets with strong governance and emerging markets with commodity leverage can help you sidestep America’s growing fiscal migraine.

Emerging market funds, particularly those focusing on countries with stable economic policies, can provide a hedge. Consider the Vanguard FTSE Emerging Markets ETF (VWO), which invests in stocks of companies located in emerging markets around the world, such as China, Brazil, Taiwan, and South Africa.

5. Hedge with Volatility or Tactical Funds

Consider low-cost ETFs or mutual funds designed to perform well during periods of high volatility, or funds that rotate between sectors based on macroeconomic conditions. These aren’t magic bullets, but they can help smooth the ride.

A volatility ETF like ProShares Ultra VIX Short-Term Futures ETF (UVXY) could capitalize on the chaos. It’s the investment equivalent of betting on a dumpster fire, but hey, profit is profit.

Read This Story: Four Meme Stocks Destined to Crash

Markets are funny things. They can ignore madness for many months or even years, until one day they don’t. Just ask the dot-com day traders in early 2000, or anyone who bought real estate in 2007.

Don’t waste your time by worrying. Just get prepared…now.

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