The US seems determined to shoot itself in the foot. That's risky when its stocks, bonds, and real estate are at such high valuations.
I have a similar mentality about the investing dangers of bad governance and instability, but a different approach to mitigating that risk.
I don't see international markets as vastly more attractive (see similar governance challenges and instability emerging in Europe, Latin America, and other markets). So my objective has been to use
collar strategies to reduce the volatility of my 90+% stock portfolio in half, and to set a firm floor on the damage that SORR events can do. When I trade a collar, I set myself up to have more upside potential than downside.
That's very similar to the goal of a more-diversified portfolio, but I chose my approach because it seems like all markets are moving in broad risk-on, risk-off ways, rather than acting as true diversifiers. 2001 and 2008 caused significant damage to value stocks, and to stocks domiciled far away from the epicenter of the panic. 2022 wiped out bonds and even TIPS, making traditional diversification nearly useless!
So my way of responding to the same problem is different than reallocating Merton shares of an AA. It's instead an attempt to ratchet the portfolio up, year after year, with a progressively higher floor on the possible return distribution and plenty of upside to capture the bull runs which can occur despite all the problems.
Because I operate with contractual protection that establishes a firm floor on returns, I can allocate more to stocks without worrying about being wiped out in a bear market. I.e. it is possible for a 95% stock AA to have the volatility of a 50% stock AA, and you get firm insurance against SORR events as an added bonus. I don't know if one could say the same about a portfolio heavy in long-duration bonds, or UK stocks, for example.
