You're an investor, Harry. Not a political commentator. I don't know why I'm reading about 2020 and 2008, this is not merely bubbles bursting and markets cycling but is a potential paradigm shift, a potential change in a similar nature to the change after the Second World War.
If anyone is smart and looking to get into investing then it's important to recognise no one here is talking like it. People need to see signal through the noise. Don't be simply a cycle thinker who is thinking "Markets are down! Buy the dip?" and are blind to new risks and opportunities, instead see that we may be exiting an era and entering a new one, and that this may be the beginning of the end for overexposed sectors built for the old world, while there can be emerging investment opportunities in previously dull neglected industries, such as regional manufacturing and water security and energy and so on.
This is the time to remind yourself that if you want to be an investor then don't practise being a political commentator. This will be time to do dust off some books, do some deep research, and be the early bird and see the opportunties. I've been retired for a while and not paid attention to markets, and I'm not at all familiar with these online spaces, and perhaps it's very different as there's an influx of casual investors, but the discussions are very disappointing.
What are governments going to be incentivising? What's too strategically important to fail? What will business be trying to secure? We may be about to go from laissez-faire to industrial policy. Talk about European service and tech and defense, talk about American manufacturing, semiconductors, robotics and automation to offset U.S. labour costs, defense and aerospace, vertical integration, agricultural land and water. This can be a new world where you want to be looking at ETF exposure to U.S. manufacturing renaissance while talking about undervalued EU tech firms and digital infrastructure.
And I've been thinking that junk bonds are looking very interesting, it could be a new junk bond golden age. Why buy garbage? Because trash pays. There's much creativity around credit. If you want to go sewer diving it won't be easy business but I have a feeling there's going to be more diamonds down there than not in the coming new world. If there's a clever kid out there who's sick of hearing 'Buy Nvidia' and who can figure this stuff out then in the coming markets junk bonds could the opportunity to become the evil financier billionaire that you were born to be, a mini Oaktree or Apollo. All these tariffs, particulalry targetting China and other major trade partners, and a general breakdown of globalisation and new economic direction, may cause a lot of initial market downturn but the upheaval can result in big yields for risky investments, like junk bonds, as investors look for maximising returns in high-risk low-growth environments.
Heavily indebted U.S. legacy manufacturers and supply chain firms, companies for steel, tools, and construction materials with big debt but strong domestic exposure, legacy equipment rental and logistics firms tied to domestic transport etc, are weak on paper but there could be enormous government incentivisation and reshoring trends, bonds can be priced as if they're dying but with contracts the debt could double. Energy infrastructure and oilfield services have volatile cash flows, big leverage, spooked investors, but with geopolitical energy crises demand can get big. Talk about offshore drilling companies, midstream energy firms, LNG infrastructure. Media and Telecom? A lot of cable companies are loaded up on debt from cheap money era and their stocks and bonds have been hammered but their cash flows are real. And all the emerging markets; commodity exposure and geopolitical alignment means surprising stability. Emerging Market corporate debt is priced with panic but countries who benefit from resource demand can gain a lot of capital flow and influence. Think about commodity-exporting firms and Emerging Market infrastructure companies tied to Belt & Road alternatives and BRICS trade realignment. And when it comes to the likes of U.S. office real estate and China's property sector people may need a hazmat suit, but these sorts of things bonds trading low could rebound very high with restructuring and policy rescue, though that's landmine territory, but if you can figure out explosive ordnance disposal you'd be the king of the jungle, where bonds bleed and yields roar. Make no mistake it won't be the yawn fest of your grandmother's Vanguard ETF drip, it's all Hard Mode, but watch the ICE BofA High Yield OAS, the spread over treasuries. It spikes when fear spikes, and that's when yields balloon and blood hits the water.