Trump & Venezuela: New Foreign Policy, New Changes for Your 401(k)
Written by
G. Brian Davis
Edited by
Zuri Anderson
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Ask a financial planner if you should go on a buying or selling spree after the Donald Trump administration’s operation in Venezuela, and you’ll get a lecture about not getting distracted by single news stories.
Still, if you believe U.S. foreign policy has fundamentally shifted, what actions should you take in reviewing your retirement investments?
Take a Second Look at Your Diversification
Many investors don’t realize that many of the same giant companies appear in several of their index funds, hiding how over-exposed they are to a few corporations.
For example, say you own index funds that mirror the S&P 500, the Nasdaq 100, the Dow Jones Industrial Average and the Russell 1000. Apple (AAPL) makes up a disproportionate percentage of each of those indexes.
These mega-cap companies also tend to have interlinked supply chains stretching across many countries. Continuing the Apple example, the tech giant relies heavily on parts produced in both Taiwan and China, and that says nothing of its sales in those countries. If China invades Taiwan, disrupting Taiwanese production and triggering massive Western sanctions on China, what happens to Apple’s stock?
If that hypothetical sounds unrelated to Venezuela, think again.
Heightened Geopolitical Risk
“The Maduro capture is not a ‘one-off,'” explains Arie Brish, business professor at St. Edward’s University. “It ripples across other geopolitical tensions including China and Taiwan, Russia and Ukraine, and the flow of cheap black market oil to China and Iran. The Trump administration gained confidence in its foreign policy forays, which might embolden it to take other risky actions.”
Whether you agree or disagree with the administration’s foreign policy stances, they have certainly become less predictable than previous presidencies. And unpredictability adds risk.
Again, diversification helps. Investors looking at their 401(k) investments should consider including more international stocks. Despite the S&P 500 returning a total of around 16.4% in 2025 per CNB Bank & Trust, international stocks outperformed it in the first year of the new Trump administration, with the STOXX Europe 600 returning 19.0%.
Revisit Your IPS
“All investors should write an Investment Policy Statement (IPS) and follow it,” urges finance professor Robert Johnson of Creighton University. “An IPS sets down an investor’s ground rules: Return objectives and risk tolerance along with constraints such as liquidity needs and taxes.”
That written commitment, often created with a financial planner, helps prevent you from panicking when geopolitical winds start gusting harder. Of course, you can still revisit your asset allocation to diversify further or pull back from high-priced companies like current tech and AI giants.
Part of that revisiting may include protecting against inflation. The January Wolters Kluwer‘s Blue Chip Economic Indicators survey showed most economists see elevated inflation through the end of 2027, in part due to tariffs and disruptions to global trade under new foreign policy.
Today’s world is unpredictable, but panicking doesn’t help. Stick to the fundamentals of your investment statement and ride out the volatility — your 401(k) account will thank you later.
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