The impact of political decisions on certain major investment themes and evolving sectors is nothing new. The first public investments in Silicon Valley can be traced back to the early 1950s, and the swift expansion of start-ups and venture capital firms in tech sector development dates back to the 1970s.

More recently, the emergence and rapid adoption of Artificial Intelligence have accelerated this phenomenon. In January 2025, President Trump unveiled the Stargate project, a joint initiative by OpenAI, Oracle and SoftBank aimed at investing up to $500 billion in AI infrastructure in the United States. The goal of the project being to build up computing power and stimulate the US economy by creating more than 100,000 jobs. For his part, French President Emmanuel Macron in early February announced the establishment of a multiyear joint investment plan (private sector, French government, foreign powers) totalling €109 billion.

Major political decisions are there to provide strong guidance, set a priority and promote the means to achieve it. They strive to prevent or slow any obstacles in order to make the necessary possible. At the same time, if such strong decisions are challenged too often, a lot of hard work can end up going to waste. A great example of this can be taken from the European automotive industry, which has had to deal with all too frequent policy changes governing electric vehicles.

The instability of subsidies and regulations most definitely makes it harder for sector players to set long-term plans, thus stifling innovation, undermining their competitiveness and weighing on their margins. Conversely, China has successfully constructed a more stable framework, promoting the emergence of national champions that now enjoy a major technological and commercial edge on the global stage.

More recently (over the last ten years), we have thus seen the resurgence of politicians and political takes that can be described as more deep-rooted, more “patriotic” and more extreme, while also less “consensual” or diplomatic.

Another way to describe them is as more “populist” and less democratic in the primary sense of the term (separation of powers, equal rights, freedom of expression, sovereignty of the people, etc.).

In terms of financial management, this change in the type of general environment (de-globalisation, emergence of authoritarian leaders, trade war, forex control, advent of unregulated financial systems, etc.) is introducing new conditions that must then be factored into our decisions on asset allocation and choice of investment vehicles. Certain key factors in recent years, which are foundational for the financial markets, simply did not prove “feasible” in the sense that well-established rules deemed immutable by the industry were simply broken outright, most of the time for “good reason”!

Let’s look at three examples. First, the possibility for central banks to use their balance sheet with no real limitations in order to inherently influence the price of listed assets (fixed income and stocks), or even to have negative key rates. Second, the recent – and more surprising – decision by Germany to exclude certain expenses from the calculation of budget deficits, allowing them to comply with a constitutional rule... simply because they subjectively elected to avoid it altogether! Third, and this one is very relevant to current times, the almost-daily announcements of changes to tariff rates with one or another US “trade partner” by a President for whom it can be said that no one actually knows if he ultimately and constitutionally is merely acting on his own whims!

From a portfolio management perspective, there have always been uncertainties to consider when making decisions! And there always will be. To put it plainly, at this point in time, the level of uncertainty (not to mention its intensity) is of more fundamental import than it was in the early 2000s. A simple decision, sometimes purely personal, can result in a new standard, a new set of conditions, a new ban... which can upend the economic future of an entire country, sector or group of companies, whether publicly traded or not!

In this type of environment, forecasting is weak at best: right now if we ask ourselves if one or another scenario is possible, all we can really say is “almost anything is possible!” Rather than trying to predict the future (which we still have to at least try to do), it is more important to develop flexibility and adaptability in addressing what just yesterday would have seemed impossible! Ultimately, and almost unanimously, is that not what fundamentally characterises that which is most “vital” in human nature?

Preparing for, hoping for and accepting the unexpected and taking action, while tuning out all the discouraging white noise or paralysing fears!