Investing, like golf, is a mix of both the short and the long game. In the wild first half of 2025, investors have mostly focused on the short game, but now that we appear to be entering a period of relative calm, investors can start looking much farther down the fairway.
Following months of back-and-forth tariff drama after US President Donald Trump's April 2 "reciprocal tariff" spectacle, many markets now appear to be settling down.
US equities jumped around a bit this week, as news that a court had blocked much of Mr Trump's tariff agenda was quickly followed by the announcement that the tariffs would remain in place during the appeals process.
The upside of any future tariff news is apt to be limited because the risk-asset rebound already appears to have largely run its course, with most US markets -- excluding the dollar index -- more than recouping their post-"Liberation Day" losses. The S&P 500 and Nasdaq are up around 18% and 25%, respectively, since April 8.
Market focus in the US now seems to be shifting from tariffs to tax cuts, as investors zero in on the impact that widening budget deficits could have on US interest rates and dollar strength.
Outside the US, attention also seems to be turning away from the trade war, with many investors homing in on the potential for spending-driven European growth, the return of Japanese inflation and the gradual recovery of the Chinese consumer.
So let's take advantage of the current reprieve from market turmoil and consider how these longer-term trends could impact investment strategy over the next five years.
Let's first consider the scenario in which the US is transformed as Mr Trump appears to desire. Based on the policies the administration has pursued, that could mean bringing back some manufacturing to the US or perhaps even lowering the trade deficit.
But it would also likely mean deepening America's fiscal problems, creating more division among US allies, undermining the rule of law, driving out human talent, shredding the country's renewable energy programmes, and stopping up wells of research and innovation.
The anti-innovation measures are already piling up. The number of clean energy projects that were cancelled in the first quarter of 2025 was more than triple the monthly average in the prior two years.
The post-pandemic years were all about the US pulling ahead, as increased fiscal spending, technological innovation, and population growth attracted offshore capital and boosted economic growth, corporate earnings, stock multiples and the value of the dollar.
Given the Trump administration's agenda, the next five years are likely to be radically different. In just the past few months, the US growth advantage versus Europe has shrunk, EPS growth among US companies has fallen, the US tech edge has been eroded, and capital outflows have continued.
When America lags, others must lead. And as I've written previously, there are many reasons to think Europe and Asia could use the US's post-pandemic recipe to pull ahead in the coming years.
Europe certainly has a chance to seize the mantle of leadership, leveraging its fiscal space and currency strength to deepen regional integration. It could utilise its soft power and respect for the rule of law to flex its hard power.
As European Central Bank President Christine Lagarde noted, it is now within the realm of possibility that the euro could replace the dollar as the world's major reserve currency.
Meanwhile, Asian integration is apt to continue, as Southeast Asia has become China's biggest trading partner. Importantly, China appears to understand the linkages between artificial intelligence and renewable power -- a key nexus in the new technological race.
Japan, South Korea and other Asian nations likely have no desire to choose between the US and China, but Mr Trump's isolationist policies could force that exact choice.
Of course, if Mr Trump were to reverse or soften many of his policies, especially around renewable energy and immigration, take the tariff off-ramp given to him by the courts and seek to simply extend his previous tax cuts rather than make aggressive new cuts, then the US could potentially continue to outperform.
But all that seems highly unlikely. And regardless of what Mr Trump does now, governments in Europe and Asia know they need to up their game by spending more, and there is far more fiscal space to grow in these regions compared to the US.
In golf, winning the long game requires flexibility and strength, practice and determination. In the long investment game, those qualities also play a role, but ultimately, vision wins, especially in times of change like the present.
Jay Pelosky is the founder and Global Strategist at TPW Advisory, a NYC-based investment advisory firm.