If you Believe we are Traveling Down the Road to Perdition, What Should you Pack in Your Travel Bag?

John Robinson |
Categories
Gold
Crypto Currency
Hedge Funds
Stocks
Mutual Funds

By J.R. Robinson, Financial Planner (September 2025)

Despite the economy's relative strength and the S&P 500's recent all-time highs, many investors remain surprisingly unsettled. Headlines teem with anxiety—fears of runaway inflation sparked by tariffs, persistent labor shortages, a spiraling national debt, and the specter of a falling U.S. dollar. While much of this concern is driven by worst-case scenarios, prudent investors understand that hedging against systemic risk is sound financial planning. If you're determined to be ready for stormy economic weather—or just want to explore portfolio insurance—consider the following "packing list" of investments that could help shelter wealth if truly nihilistic fears prove justified.

Spot-Price Gold: The Classic Crisis Hedge

Gold's reputation as a safe haven is centuries old—and not without merit. When fears of inflation, currency debasement, or geopolitical risk flare up, gold's price often rises. Unlike fiat currencies, it's no one's liability and cannot be printed. Today, investors can gain exposure through physically-backed ETFs such as SPDR Gold Shares (GLD) SPDR Gold MiniShares (GLDM), or iShares Gold Trust (IAU), which track the spot price with minimal tracking error and are highly liquid.

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2. Bitcoin and Crypto ETFs: The New Digital Hedge

While volatile, Bitcoin is increasingly promoted as "digital gold"—an asset class with a fixed supply, decentralized structure, and a tendency to spike in value during periods of monetary uncertainty. With the launch of spot Bitcoin ETFs in the U.S., gaining crypto exposure is now as simple as buying a traditional ETF. Funds like iShares Bitcoin Trust (IBIT) and ProShares Bitcoin Strategy ETF (BITO) allow investors to allocate a small (typically 1–5%) position as a hedge or speculative asset.

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3. Unhedged Foreign Stock Funds: Hedge Against the Dollar

If the U.S. dollar weakens, assets denominated in foreign currencies may act as a ballast. Unhedged international stock mutual funds and ETFs—such as Vanguard Total International Stock ETF (VXUS) or iShares MSCI EAFE ETF (EFA)—capture foreign market returns and any appreciation in overseas currencies relative to the dollar.

Unhedged funds are particularly advantageous if you expect the dollar to decline, as currency movements amplify local stock gains.

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4. Ex-U.S. World Currency Funds: Going Global in Cash

To further diversify away from dollar exposure, currency funds or ETFs that hold a mix of foreign-denominated cash and equivalents can offer an added hedge. Examples include Invesco CurrencyShares Euro Trust (FXE) or broad-basket funds like the WisdomTree Bloomberg U.S. Dollar Bearish Fund (UDN), which provide access to the performance of a basket of foreign currencies versus the dollar. These can be paired with traditional equity or bond holdings as "insurance" against a steep dollar decline.

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Final Thought: Hedge, Don't Bet the Farm

No hedge is perfect, particularly in a world prone to surprises; excessive allocation to any one asset class can add risk of its own. However, thoughtful exposure to gold, Bitcoin, unhedged foreign funds, and world currency ETFs may help safeguard portfolios against the doomsday scenarios that keep even optimistic investors up at night.

The  idea for this article came from a LinkedIn discussion last week in which a fellow financial advisor said, "We're in very difficult times as advisors/planners. Do we put our heads in the sand and just Boglehead away? What are folks telling their clients in regard to the prospects of the dollar and US bonds and our debt?" 

I mention this because there are probably thousands of grizzled planners like me who may be tempted to ignore chaos that surrounds us and just "ride it out" (that's the "Boglehead Way") because that approach has worked 100% of the time.  In fact, I had a similar discussion on LinkedIn with another fellow  who is adopting exactly that head-in-the-sand approach.  He said, "We made it through the 2008-2009 financial crisis. We will make it through the next one too."  What he may not remember from 2008-2009, was that the outcome was not pre-ordained.  The global finance leaders were not at all sure the policy actions they were taking would work and that a global financial markets crash would be averted. 

The lesson I took away from that crisis is that advisers should ALWAYS be alert.  It also taught me it is important to plan for crises BEFORE they happen.  The asset classes highlighted in this article represent my best efforts to help you plan in advance. There is not much empirical guidance on the ideal amount to allocate to these "hedging assets."  50% seem like it might be a little bit "out there," but 0%-20% might be okay.  If you ask me, I will dump it right back into your lap.  It all depends on how worried you are.

If history is any guide, the American economy—and its markets—are more resilient than our collective fears suggest. But if the road to perdition ever really opens up before us, you'll be glad your investment bag was packed for anything.

John H. Robinson is the owner/founder of Financial Planning Hawaii and Fee-Only Planning Hawaii. He is also a co-founder of fintech software maker Nest Egg Guru.