Thanks for the details! I will analyze investment strategies to hedge against a deep recession and potential autocratic governance, focusing on preserving and growing your wealth. This will include:

Diversifying your portfolio to hedge against the decline of U.S. hegemony and economic instability.
Strategies for protecting your emergency fund from inflation and economic shocks.
Historical comparisons to the Great Depression, 1970s stagflation, Argentina’s economic crises, and the rise of fascism in Europe to determine how similar portfolios performed.
The best asset allocation considering potential layoffs, inflationary pressures, and market crashes. I’ll get back to you soon with a well-researched plan.

Investment Strategies for Hedging a U.S. Downturn and Autocracy Risk

Portfolio Overview: You currently have a **net worth of $1.7M** with heavy exposure to U.S. equities ($ n1M in VTI) and international equities ( $351K in VXUS). The remainder is in cash ($ n20K), I-bonds ( $40K), unvested company stock ($ n92K), and home equity. This allocation positions you for growth, but it’s heavily tied to the U.S. market and dollar. To hedge against a deep U.S. recession, rising authoritarianism, and inflation, a more diversified strategy is prudent. Below is a detailed analysis and recommendations for: (1) diversifying your portfolio across asset classes, (2) securing an emergency fund against extreme scenarios, (3) lessons from historical crises (Great Depression, 1970s stagflation, Argentina, 1930s fascism), (4) geographic diversification, (5) alternative investments as hedges, and (6) risk management in case of job loss. All recommendations aim to preserve long-term growth while mitigating “tail risks” from U.S. economic decline or political instability.

1. Portfolio Diversification for Downturns and Political Risk

Challenge: Your current portfolio is ~80%+ in stocks (mostly U.S.). This drives growth in normal times, but leaves you vulnerable to a U.S.-centric downturn or domestic political turmoil. In a severe recession or autocratic shift, U.S. stocks could underperform or even become subject to capital controls or seizure risk. The goal is to rebalance toward a more resilient, all-weather allocation that can withstand inflation, recession, or political instability.Recommended Adjustments: Consider the following target allocation shifts to hedge risks while maintaining growth potential:

Increase Safe-Haven Assets (5–15%): Allocate a portion to gold or precious metals. Gold has historically acted as a safe haven in times of economic or political crisis. For example, during the Great Depression, gold was the top-performing asset – after the 1934 dollar devaluation, gold’s dollar price jumped 69%, roughly doubling its purchasing power while stocks and real estate values plungedwww.voimagold.com www.voimagold.com. In the 1970s stagflation, gold was again a clear winner, rising nearly 1,000% after the U.S. came off the gold standardawealthofcommonsense.com. A 5-10% gold allocation can help hedge against inflation, currency debasement, and extreme political riskwww.wealthmanagement.com. Gold tends to hold value when confidence in governments or currencies falters, though it may lag in calm markets. You can invest via physical gold, gold ETFs, or gold mining stocks (the latter add equity risk).
Add Commodities (5–10%): Broad commodity exposure (energy, metals, agriculture) can protect against surging inflation and supply shocks. In the 1970s, a commodity index delivered a 586% total return (21% annually) as oil and raw material prices soaredwww.kiplinger.com www.kiplinger.com. Such an allocation would likely outperform in an inflationary recession or war scenario where resource scarcity drives prices up. However, note that over the long run, commodities have zero real growth on average – after the 1980s, commodity indexes had “cash-like returns with stock-like volatility” for decadesawealthofcommonsense.com. Thus, treat commodities primarily as an insurance hedge rather than a growth engine. A small allocation via a broad commodities ETF or natural resource fund can buffer inflationary “stagflation” periodsawealthofcommonsense.com.
Diversify Equities Globally (≈30%+ International Stocks): You already have ~20% in international equities (VXUS). Consider increasing this to ~30–40% of your stock portfolio to gain exposure to other economies and currencies. International stocks provide access to growth outside the U.S. and can cushion against a falling dollarwww.kiplinger.com. In the 1970s, for instance, foreign stock markets and real assets outpaced U.S. stocks in real terms, partly due to dollar weaknesswww.bogleheads.org. Ensure you have a healthy mix of emerging markets within that international bucket (EM economies like Asia or Latin America) which may offer higher long-term growth and often benefit from commodity-driven cycles. Keep in mind, emerging markets carry their own political risks, but as a smaller portion of a global fund (VXUS already includes EM), they add diversification. Geopolitical autocracy risk works both ways – while you hedge U.S. political risk by investing abroad, be mindful of authoritarian regimes abroad too. Favor a broad international index or combination of developed and emerging market funds to spread risk. This way, you're not overly exposed to any single foreign regime.
Increase Inflation-Protected Bonds (10–15%): To hedge inflation and provide stability, consider adding Treasury Inflation-Protected Securities (TIPS) or more Series I-Bonds (beyond your current $40K). These are low-risk U.S. government bonds that adjust with inflation. They preserved purchasing power in the 1970s when nominal bonds were ravaged by rising prices. For example, a mix of short-term Treasuries and TIPS can hold value when stocks fall. In stagflation scenarios, short-term bills and TIPS often outyield stocks in real termsawealthofcommonsense.com. Keep in mind TIPS are U.S. government-backed – they hedge inflation but not currency redenomination risk. As an alternative or addition, international inflation-linked bonds (from stable countries) could provide protection if U.S. inflation statistics become politically manipulated. The key is to have some bond/cash ballast that can be tapped in deflationary recessions or to avoid forced stock sales in a crash.
Hold or Increase Cash Reserves (5%+): Maintaining cash or cash equivalents (money market funds, short-term Treasuries) gives dry powder and liquidity. In a deflationary bust or market crash, cash gains relative buying power (as seen in the 1930s). While cash loses value under high inflation, it’s still critical for short-term needs and opportunistic buys. Keep at least 6+ months of expenses in very safe, liquid form (details in the Emergency Fund section). You might also consider a foreign currency savings as a hedge – e.g. holding some funds in Swiss francs or other stable currencies if you truly fear USD instability. This can be done via foreign bank accounts or currency ETFs, but be mindful of fees and logistics.
Real Estate & Hard Assets (20%+ including Home): Your home is a significant asset that provides some inflation protection (real estate values generally rise with inflation over long periods). Beyond your primary home, you could diversify into REITs (Real Estate Investment Trusts) or even foreign real estate. Real estate often holds value when paper assets falter, because it’s tangible and yields rental income. During the 1970s, real estate kept up with or beat inflation – for example, U.S. REITs gained about 100% total (nominal) from 1971–1981, with rents/dividends helping maintain real valuewww.kiplinger.com www.kiplinger.com. Rental property or REIT exposure can thus hedge both inflation and political risk (especially if diversified across regions). You might allocate ~5-10% to a global real estate fund or a REIT index. Additionally, farmland or commodities-related land (if accessible) can be an excellent hard asset hedge – though illiquid, farmland tends to appreciate in inflation and can produce income (crops). In summary, shifting from an ~80–90% equity U.S.-centric portfolio to a more balanced mix of stocks, bonds, and real assets will reduce vulnerability. A model allocation for you might be, for example: 50–60% equities (half or less U.S., the rest international with some EM), 15–20% bonds (mix of nominal and inflation-protected, some international), 10% gold/commodities, 5–10% real estate/REITs, and ~5% cash. This is just one example – the exact percentages can vary – but the theme is increased diversification across asset classes and geographies. Such an allocation is more likely to weather a U.S. downturn or political crisis: if U.S. stocks drop or the dollar weakens, other assets (gold, foreign stocks, etc.) may rise or hold value, smoothing out your overall returnswww.kiplinger.com. Importantly, this still retains considerable equity exposure for long-term growth, just not only in the U.S. market.

2. Emergency Fund Strategy for Inflation and Instability

Challenge: Ensuring you have 6–12 months of living expenses in an emergency fund that won’t be eroded by inflation or frozen in a crisis. You currently hold ~ $20K cash (and$ n40K in I-Bonds). In an environment of high inflation or financial repression, holding too much in a low-yield bank account can lose purchasing power, but chasing yield can introduce risk. There’s also the extreme scenario of geopolitical instability (e.g. bank freezes, currency controls) to consider.Recommendations for Emergency Funds:

Keep 6–12 Months in Safe, Liquid Assets: At minimum, have enough in high-yield savings or money market funds to cover essential expenses for half a year or more. This ensures quick access if you face a layoff or market crash (when selling investments would be suboptimal). High-yield online savings accounts or Treasury money market funds currently yield competitive rates that at least blunt inflation. For example, 6-month T-bills or money market funds can yield ~5% in today’s rates, keeping you close to inflation. Avoid tying up all emergency savings in stocks or long-term assets – capital preservation and liquidity are the prioritywww.reddit.com.
Utilize Inflation-Protected Instruments: To prevent inflation from eating away your rainy-day funds, use tools like Series I Savings Bonds and TIPS ladders for a portion of the emergency fund. I-Bonds (which you already own $40K of) are U.S. government bonds indexed to CPI inflation (with rates currently high due to recent inflation). They have a yearly purchase limit ($ n10K per person), but if you haven’t maxed out this year, consider buying more. They do have a 1-year lockup, so they can’t serve the very first line of defense, but after a year they become accessible (with a small interest penalty if redeemed within 5 years). TIPS can be bought in a ladder of maturities so you have some maturing each year that can be accessed if neededwww.fidelity.com www.bogleheads.org. These instruments ensure your emergency stash maintains real value even if inflation spikes.
Hold Some Physical Cash (and possibly Gold): For geopolitical tail-risk (though unlikely), it’s not unreasonable to hold a small amount of physical U.S. cash hidden securely, as well as possibly some small-denomination gold or silver coins. In scenarios of extreme crisis (banking outage, government-imposed withdrawal limits), physical cash on hand ensures you can transact for essentials. Likewise, a bit of gold or silver could be a last-resort currency if the dollar is ever undermined – they are a form of universally recognized money. This is the “mad money” insurance Barton Biggs referred to for wartime – gold/jewelry that you keep outside the banking system for dire emergencieswww.wealthmanagement.com. We’re talking modest amounts here (enough for a few months expenses at most), kept safe and discreetly.
Consider Foreign Cash or Account: As an added hedge against “inflation manipulation or geopolitical instability” as you mentioned, some people keep a portion of savings in a stable foreign currency or overseas bank. For example, one might hold some euros or Swiss francs in a foreign account or as cash. The idea is if the U.S. dollar were to rapidly lose value or U.S. banks faced controls, you have a backup stash in another currency. Historically, in countries with high inflation or capital controls (e.g. Argentina), citizens often hoard U.S. dollars under the mattress as a reliable store of valuewww.youngmoney.co www.youngmoney.co. In your case, the USD is the local currency – so your analogous hedge could be euros/CHF, etc. This is only worth doing for a small portion, given currency exchange hassle – but it’s a thought for worst-case hedging.
Accessibility and Diversification: Ensure your emergency funds are spread across a few places for redundancy. For instance, some in your primary checking bank, some in a secondary bank or credit union, some in TreasuryDirect (I-Bonds) or brokerage (T-bills). This way, a single point of failure (one bank freezing up) won’t cut off all access. Also consider establishing a Home Equity Line of Credit (HELOC) on your home while employed, as an additional emergency liquidity source. A HELOC can provide a large sum at low interest if needed (essentially using your home equity as backup cash)lendedu.com. Many financial planners suggest opening a HELOC as a contingency plan – you don’t draw on it unless needed (and it costs little to keep open), but if a layoff or crisis occurs, you can tap it for living expenses without selling investments at a bad timelendedu.com lendedu.com. Just be cautious: a bank can reduce/close a HELOC in a severe housing downturn, so it’s a second line, not a primary emergency fund. Bottom line: Maintain an emergency fund of 6–12 months expenses in a combination of FDIC-insured cash, short-term Treasury funds, and inflation-indexed bonds. This will protect you against personal income shocks (like a layoff) and general inflation. By diversifying the form (bank deposits, I-Bonds/TIPS, a bit of cash-in-hand), you also hedge against more extreme scenarios such as bank freezes or rapid currency devaluation. The goal is to ensure you can always meet basic needs without fire-selling long-term investments, no matter what happens in the economy.

3. Lessons from Historical Crises: What Worked When Things Went Bad

History offers valuable clues on how different portfolios survive worst-case scenarios. Let’s examine four analogues: the Great Depression (1930s deflationary collapse), 1970s stagflation, Argentina’s chronic hyperinflation, and the rise of fascism in 1930s Europe. Each represents extreme economic or political upheaval, and highlights which assets held value.

Great Depression (U.S. 1929–1939)

Scenario: A severe deflationary depression and banking crisis. U.S. stocks fell ~89% from 1929 to 1932, unemployment spiked ~25%, many banks failed. The government eventually devalued the dollar and confiscated gold in 1933–34 to fight deflation.Portfolio Outcomes: A traditional stock portfolio was devastated. From 1929 peak to 1932 trough, the Dow Jones lost almost 90%www.voimagold.com. Highly leveraged investors were wiped out. Even supposedly safe bonds suffered – many corporate bonds defaulted, and even government bonds lost real value once the dollar was devalued (the $repayment had less purchasing power)[voimagold.com](https://www.voimagold.com/releases/articles/gold-in-crises-part-2-great-depression/#:~:text=enough%20buyers%2C%20and%20so%20the,in%201933%20alone). Real estate collapsed as well: U.S. home prices fell ~35% in 1933 alone amid mass foreclosures[voimagold.com](https://www.voimagold.com/releases/articles/gold-in-crises-part-2-great-depression/#:~:text=enough%20buyers%2C%20and%20so%20the,in%201933%20alone). **The standout asset was gold.** At the time the dollar was on a gold standard, but in 1934 the U.S. government **devalued the dollar** relative to gold (raising gold’s price from$ n20.67 to $35/oz)www.voimagold.com. Effectively, gold’s value in dollars jumped ~69%. Those who had exchanged dollars for physical gold before the devaluation preserved their purchasing power bestwww.voimagold.com www.voimagold.com. In fact, gold’s purchasing power doubled relative to real estate by the mid-1930swww.voimagold.com www.voimagold.com. Once the devaluation occurred, holding cash (dollars) was less advantageous, but holding gold or foreign currency became a big winner. After 1934, the U.S. forbade private gold ownership (forcing sales to the Treasury at the old price), so an ordinary investor within the U.S. had limited ways to benefit unless they anticipated and moved into gold early. Another asset that quietly did well in the early Depression was long-term Treasury bonds (for a time): during 1929–1932, prices fell (deflation) so real interest rates were high – if you held onto high-quality bonds through the devaluation, you earned interest while prices of goods dropped. But anyone holding cash or bonds through 1934 saw the dollar weakened afterwards. The key lesson: diversification into hard assets (like gold) and avoiding heavy leverage was crucial. A portfolio with a gold component and high-quality bonds weathered the deflation and the subsequent devaluation better than an all-stock portfolio.

Relevance: For today’s investor worried about a severe recession or policy missteps, the Depression shows the importance of hedges like gold and the danger of debt/leverage. It also shows that even government policy (e.g. changing currency value) can drastically affect asset values. Applying this: holding some gold, some cash (for deflationary shocks), and avoiding margin debt can protect you in a 1930s-like scenario. While a 1930s-scale collapse is rare, it’s reassuring that a balanced portfolio (stocks/bonds/gold) would have fared far better than pure stocks.

1970s Stagflation (U.S. 1970–1982)

Scenario: A period of high inflation, weak growth, and rising interest rates – the opposite of the 1930s. U.S. inflation hit double-digits (13% by 1979), driven by oil shocks and loose monetary policy, while growth stagnated. Unemployment was high and the stock market went nowhere in real terms for a decade.Portfolio Outcomes: Traditional stocks and bonds struggled to keep up with inflation. U.S. large-cap stocks had essentially zero real return in the 1970s – nominally they eked out gains, but after inflation, an investor actually lost purchasing power. One estimate shows U.S. stocks lost about 1.4% per year after inflation in the 1970s despite nominal growth, meaning a 60/40 stock-bond portfolio merely broke even at bestawealthofcommonsense.com. Bonds fared no better: rising interest rates meant existing bond values fell, and any interest earned was eroded by inflation (long-term bondholders saw negative real returns). In fact, short-term cash (T-bills) outperformed both stocks and bonds on a real basis because interest rates were climbing with inflationawealthofcommonsense.com. It truly was a “lost decade” for conventional portfolios.

The winners were hard assets and certain equity sectors. Gold was the standout: once the U.S. ended the gold standard in 1971, gold’s price surged from $35/oz to around$ n800/oz by 1980 – a gain of over 2,000% (roughly 10x, accounting for the late 60s to 1980)johnrothe.com www.ssga.com. Investors flocked to precious metals as an inflation hedge and safe haven. Commodities broadly boomed – for example, the S&P GSCI commodity index returned an astounding +586% total between 1970 and 1979www.kiplinger.com www.kiplinger.com. Oil prices famously jumped after the 1973 Arab oil embargo (crude oil up 8-9x by 1980), which fed into commodity funds. Real estate also helped preserve wealth: U.S. real estate (via REITs) doubled in nominal terms in the 1970s, and with rental incomes, real estate roughly kept pace with inflationwww.kiplinger.com www.kiplinger.com. Certain stock sectors that benefit from inflation – energy, materials, and consumer staples – outperformed within the stock marketwww.kiplinger.com. International stocks did relatively well too, partly due to currency effects – as the dollar weakened in the late ‘70s, foreign asset returns translated into more dollarswww.kiplinger.com.

Key lesson: In stagflation, diversify beyond standard stocks/bonds. A portfolio with commodities, gold, real estate, or inflation-indexed bonds would significantly outperform one without. For example, an investor with 10–20% in gold/commodities in the 1970s had a big cushion to offset stock losses. Even holding some foreign stocks or currencies was beneficial as the dollar’s value droppedwww.kiplinger.com. Today’s takeaway is to include explicit inflation hedges in your portfolio. TIPS and I-Bonds didn’t exist in the 1970s but serve that purpose now. Commodities can spike unpredictably, but a small allocation is like “insurance” that pays off in those rare inflationary decadesawealthofcommonsense.com. And again, real assets (property, gold) proved their worth when fiat money lost value.

Argentina’s Inflationary Crises (various, late 20th – early 21st century)

Scenario: Argentina has experienced repeated bouts of extreme inflation and currency collapse (e.g. the 1980s hyperinflation, and ongoing high inflation in recent years, topping 50–100% annually). It also has a history of government instability, debt defaults, and capital controls – an example of a developed society sliding into economic chaos.Portfolio Outcomes: In chronic high inflation, holding cash in local currency is disastrous – Argentinian pesos rapidly lose value by the day. Locals adapt by shifting wealth into anything that will hold value better. A popular saying is that in Argentina, even used cars appreciate – indeed, a used car, normally a depreciating asset, may rise in price simply because it’s a hard asset that holds value better than rapidly-depreciating pesoswww.youngmoney.co. The population’s go-to hedge is the U.S. dollar. Argentines with savings immediately convert pesos to USD on the black market (“blue dollar”) because even 8-10% U.S. inflation looks heavenly stable compared to 50%+ at homewww.youngmoney.co www.youngmoney.co. U.S. $100 bills are stashed in safes and under mattresses as an unofficial second currencywww.youngmoney.co www.youngmoney.co. The wealthy and middle class also try to move money offshore: it’s common for those who can afford it to open bank accounts abroad or buy foreign assets (stocks, bonds, real estate in Miami or Uruguay, etc.) – anything to get money out of the local systemwww.youngmoney.co www.reed.edu. This capital flight is rational because local bank deposits can be frozen or forcibly converted to devalued currency (as happened in the 2001 crisis). Real assets are another refuge: people buy tangible goods – real estate, land, even commodities like grains or rice – since those keep up with inflation better than paper moneywww.reed.edu. Gold and precious metals also serve as a store of value for some (though surprisingly, many Argentines favor USD over gold for familiarity).

In summary, an Argentine-style strategy means minimizing exposure to the local currency and financial system. The winners are hard assets and foreign currency. Any investment denominated in a stable foreign currency (USD, EUR) vastly outperforms local bonds or cash. For instance, Argentine stocks did rise nominally during high inflation, but much of that was just inflation illusion; an investor who instead bought U.S. stocks or simply held USD would have preserved far more real wealthwww.reed.edu. Even an informal investment like buying a year’s worth of non-perishable goods (to avoid future higher prices) can beat holding cash in hyperinflation.

Key lesson: To hedge an extreme inflationary scenario or loss of trust in government, diversify into foreign currencies and real assets. Don’t rely on domestic bonds or bank promises if you suspect hyperinflation or default risk. In practical terms for a U.S. investor, this means if you fear the U.S. could someday follow that path (unlikely, but we’re stress-testing), you would want assets outside the U.S. dollar: e.g. some gold, some crypto, some foreign currency accounts, international stocks/bonds. It also underscores having part of your wealth in tangible assets (real estate, commodities) that governments can’t easily destroy through inflation. Argentina also teaches the importance of liquidity outside the banking system – when governments freeze bank accounts or impose exchange controls, those with cash stashes or crypto wallets have an edge. While the U.S. is far more stable, these measures are like insurance. Think of it as adopting a “global citizen” approach: keep a portion of wealth in global assets so no single country’s crisis can wipe you outwww.reed.edu.

Rise of Fascism in 1930s Europe (Political Collapse and War)

Scenario: Democracies fell to dictatorships (e.g. Nazi Germany, Fascist Italy, Spanish Civil War). Rule of law eroded, and ultimately World War II devastated many countries. This is the extreme of political risk – loss of property rights, capital controls, or outright destruction of assets during conflict.Portfolio Outcomes: When a country turns autocratic or descends into war, local investments can become worthless or inaccessible. For example, investors in Germany in the 1930s saw their domestic stocks and bonds collapse by the end of WWII – the currency (Reichsmark) was rendered nearly worthless by 1945, and the post-war new currency conversion wiped out most nominal wealth. German government bonds from prior decades became nearly valueless (German bondholders lost over 90% in real terms around WWII)www.wealthmanagement.com. Even bank deposits could be seized or vaporized by hyperinflation (Germany 1923 hyperinflation destroyed all Reichsmark savings – “German bill investors lost everything in 1923”www.wealthmanagement.com). Equities in fascist countries didn’t protect wealth either, especially for those on the losing side of war – many companies were destroyed or nationalized. Meanwhile, those who moved assets abroad or into hard valuables survived best. Historical accounts show that wealthy individuals who transferred money to Swiss bank accounts, gold, or jewels before the war were able to preserve some wealth. Gold and jewelry in particular were lifelines for refugees: during WWII, portable wealth like gold coins or diamonds could be used to buy passage to safety or traded for food in occupied Europe. Barton Biggs’ research in Wealth, War & Wisdom found that gold/jewelry served as effective “flight capital” – a small fortune in gems sewn into clothing, for example, could get a family out of a country or bribe officialswww.wealthmanagement.com. He cautioned to keep such assets at hand rather than in a bank – in Europe, when Nazis took over, they often raided bank safe deposit boxes, so hiding gold at home or abroad was saferwww.wealthmanagement.com.

Owning foreign assets was crucial. If a German in 1930 had some U.S. or U.K. stocks or a bank account in Switzerland, those investments would come through the 1940s intact (assuming they weren’t confiscated due to being enemy assets – a risk if not held in neutral countries). Many didn’t have that luxury due to capital controls once fascists took power – it became hard or illegal to move money out. That’s why preemptive diversification was key. Interestingly, bonds of the winning countries did OK: U.S. or British government bonds paid out and held value if you were on the winning side (though they lagged stocks in the very long run). But in the losing nations, all bets were off – even owning cash under the mattress didn’t help if that cash was in a currency that later died. Real estate in war zones was hit-or-miss: some farmland or properties survived, but many urban properties were destroyed by bombing or seized. Artworks were looted extensively (and art is hard to transport and sell under duress, making it a poor emergency asset)www.wealthmanagement.com.

Key lesson: In a scenario of autocratic governance or conflict, the only assets you truly “own” are those you can hold or those in safe jurisdictions. To hedge against political collapse, ensure part of your wealth is international and portable. This might mean: holding some portion of your portfolio in foreign brokerage accounts or offshore trusts, owning some physical gold or high-value portable assets, and not relying solely on government promises. Even in today’s context, consider the “tyranny risk factor” – research shows that countries with strong rule of law and democracy have significantly higher stock returns and investor protections than authoritarian regimesalphaarchitect.com. Thus, if one worries the U.S. could slide toward autocracy, it reinforces investing in other countries with solid governance to balance that riskalphaarchitect.com. The historical evidence is clear that diversification by geography can be the difference between preserving wealth or losing everything when a country goes rogue. It’s an extreme hedge (the U.S. is still a very safe haven by global standards), but given the question’s premise, it’s worth heeding.

Summary of Historical Insights: In deflationary collapse (1930s), gold and high-quality bonds shine. In inflationary stagnation (1970s), commodities, gold, real estate, and foreign assets soar while stocks/bonds flounder. In hyperinflationary autocracy (Argentina), foreign currency, hard goods, and anything outside the local financial system wins. In dictatorship/war (1930s-40s Europe), portable wealth and offshore assets protect best, while local securities can be wiped out. The common thread is diversification and non-correlation: a mix of asset classes and jurisdictions greatly increases the odds that no single disaster takes down your entire net worth. We can’t predict which, if any, of these scenarios might play out, but by learning from each, your portfolio can be positioned to handle a wide range of extreme outcomes.

4. Geographic Diversification: International Shields Against U.S. Risks

Why diversify globally? The U.S. has been a top-performing market for years, but concentration in any single country (even one’s home) carries “deep risk” – the risk of permanent loss from adverse political or economic events. Geographic diversification means spreading investments across various countries and regions, so that no one nation’s crisis can sink your portfolio. This is especially relevant if one worries about rising U.S. political instability or authoritarian policy shifts. Diversifying abroad not only hedges political risk, but also currency risk (the U.S. dollar in this case).Stocks: You already hold broad international stock exposure via VXUS. It may be wise to increase international equities further, as noted, to perhaps one-third or more of your stocks. Make sure this includes both developed markets (e.g. Europe, Japan, Canada – many of which have stable democracies and mature economies) and emerging markets (China, India, Brazil, etc. – faster growing but sometimes higher political risk). The benefit is twofold: (1) If the U.S. economy stagnates or U.S. companies face hostile regulation, foreign markets might still prosper, providing growth from elsewhere. (2) If the U.S. dollar weakens significantly (say due to high debt or Fed money printing), the foreign stocks’ value in USD will rise, because you’ll get currency appreciation on top of local stock gainswww.kiplinger.com. For example, a U.S. investor in international funds gains if those foreign currencies strengthen against the dollarwww.kiplinger.com. As cited in a Kiplinger analysis, owning international stocks gives “access to growth in other countries as well as any tailwinds from a depreciating dollar”www.kiplinger.com. In practice, global stock indices have lower correlation to the U.S. than one might think – in the 2000s, for instance, foreign and emerging stocks greatly outperformed U.S. stocks (partly due to a falling dollar and commodity boom). By diversifying, you increase the chance that at least some equity holdings are doing well at any given time.

One caveat: be mindful of what foreign countries you’re exposed to. If your concern is autocracy, note that some major components of VXUS are China (an autocracy) and other emerging markets with political risk. That doesn’t mean avoid them entirely (they provide uncorrelated growth), but don’t concentrate too much in any single high-risk country. Favor broad index funds that cap any one country’s weight. You might also tilt a bit more to markets known as “safe havens” – for example, countries like Switzerland (known for stability, strong currency) or Singapore. These could be through specific funds or just part of a broad fund. Essentially, ensure your international basket spans many countries.Bonds: Geographic diversification isn’t just for stocks. International bonds can play a role in hedging U.S. economic decline. Most of your current fixed income is in U.S. dollars (I-Bonds). You could allocate a portion to foreign bonds, particularly from countries with credible monetary policy (e.g. German Bunds, UK Gilts, Canadian or Australian government bonds, etc.). The advantage is if the dollar weakens or U.S. inflation stays high relative to others, those foreign bonds’ currencies will gain vs USD, boosting your returns when converted back. They also respond to different interest rate cycles – for instance, if U.S. rates are low but another country’s are high, you earn that higher yield. One consideration is currency risk – unhedged foreign bonds will fluctuate with exchange rates, which adds volatility. But in your case, that currency exposure is exactly the hedge you want (since a key worry is USD instability). Morningstar notes that nondollar-denominated bonds can provide better diversification for a U.S. investor’s bond portfolio than dollar-hedged foreign bondssg.morningstar.com. So you might invest in an international bond fund (unhedged) that holds a mix of global government bonds. Even emerging market local bonds could be considered at the margins (they have high yields that incorporate inflation expectations, and some, like those from countries with improving policies, could pay off if the dollar slides). However, size this modestly given higher default risk in EM. The main idea: holding some non-U.S. fixed income gives you exposure to other monetary regimes. If the U.S. were to enter an era of financial repression (keeping rates artificially low while inflation is high), having money in, say, an inflation-linked German bond or a Swiss franc bond could preserve value better.

Real Assets Abroad: Beyond paper securities, consider international real assets. This could range from buying a rental property abroad to simply investing in international REITs or infrastructure funds. Wealthy investors in unstable countries often buy real estate in stable countries as a safe haven (e.g. Chinese and Russian investors buying London or New York apartments to safeguard wealth)knowledge.wharton.upenn.edu. You as a U.S. investor might invert that logic – maybe acquiring property in a second country as a hedge. This is a big step and not necessary for everyone, but it has ancillary benefits (a place to live if ever needed, potential rental income, and asset diversification). If that’s too involved, a global REIT fund can give exposure to real estate markets in Europe, Asia, etc., without direct property management. Real estate values depend on local factors, so if the U.S. property market slumps due to domestic issues, foreign property might not.

Safe Haven Assets and Jurisdictions: Geographic diversification also means thinking where your assets are custodied. Having all accounts in the U.S. means they’re subject to U.S. regulations and any potential capital controls (however unlikely those may be). Some investors open a foreign brokerage or bank account in a jurisdiction known for safety (like Switzerland, Singapore, or Canada) as an extra layer of protection. For example, you might keep some cash or gold in a Swiss vault, or an account with a global bank. This way, if the U.S. imposed a sudden restriction on withdrawals or conversions, you have a foothold elsewhere. Admittedly, this is extreme prep, and most people don’t need it – but given the autocracy scenario, it’s worth mentioning. Even without opening foreign accounts, you can own foreign assets from a U.S. account (e.g. buy non-U.S. Treasury bonds in a U.S. brokerage), which still gives the financial exposure if not the legal diversification.Benefit vs. Cost: International diversification sometimes lags U.S. returns in booming times (e.g. the 2010s bull market saw U.S. stocks dominate). But the goal here is not to chase the highest return every year; it’s to reduce tail risk and preserve capital through turmoil. As one analysis put it, investing globally may not always boost returns, but it “without question reduces deep risk” (the risk of severe loss)www.morningstar.com. And there’s empirical support that over very long periods, more democratic, stable countries’ markets yield higher returns – so if you invest abroad, lean toward markets with strong institutionsalphaarchitect.com. In effect, you’re aligning your money with places that respect investors.

In summary, spread your bets globally. Own a world index of stocks rather than just S&P 500. Hold some bonds in other currencies. Maybe even physical assets or accounts outside the U.S. This geographic hedge means that if the U.S. has an outsized crisis – whether economic (debt crisis, stagflation) or political – your financial future isn’t entirely tied to that ship. You’ll have lifeboats afloat in other seas.

5. Evaluating Alternative Investments as Hedges

Beyond stocks, bonds, and traditional assets, you mentioned gold, crypto, foreign real estate, and inflation-protected bonds as potential hedges. We’ve touched on many of these already, but let’s summarize the role and performance of each as an “alternative” investment in your context:

Gold: Gold is the classic disaster hedge. It tends to thrive on fear, inflation, or currency debasement. We saw its record in past crises: best asset of the Great Depressionwww.voimagold.com, huge run in the 1970swww.kiplinger.com, and a reliable store in war. It’s uncorrelated with stocks in the long run and tends to have an inverse correlation to the dollar’s strength. Gold’s downsides: it produces no income (unlike bonds or real estate) and can underperform in stable or rising-rate environments (e.g. gold lagged stocks in the 1980s-90s when inflation was subdued). However, as a small percentage (5-10%) of a portfolio, gold can significantly reduce volatility and provide cash when everything else is down. Notably, gold is also a hedge against currency collapse – if one truly worries about the dollar in the long term, gold (along with silver or other precious metals) is a way to hold value outside any fiat systemwww.wealthmanagement.com. It also is universally recognized, making it a potentially useful asset if you ever needed to move across borders in a crisis. For implementation, you could buy some physical gold coins (securely stored), or use a gold-backed ETF for convenience. There are even vaulted gold services in Switzerland for the uber-cautious. In normal times, gold’s price might zigzag with investor sentiment on inflation. But you’re keeping it as insurance. Think of gold as the asset you hope doesn’t have to save the day – but you’re glad to have it if things go awry.
Cryptocurrency (Bitcoin & others): Crypto is a newer, more volatile hedge. Bitcoin in particular is often called “digital gold” – it has a capped supply and is decentralized, which appeals to those fearing fiat money printing or authoritarian control. In countries like Venezuela, we already see citizens using crypto to escape hyperinflation and capital controlstime.com www.csis.org. In Venezuela’s crisis, holding Bitcoin was better than holding bolivars (local currency) by far, and it was even more practical than holding USD in some cases due to ease of transfer under capital controlswww.csis.org. Crypto’s advantage is that it’s censorship-resistant and portable: a memorized passphrase can secure your assets across borders, out of reach of any governmentwww.csis.org www.csis.org. For an American concerned about a future autocratic government freezing bank accounts, Bitcoin could be a way to keep some wealth in a form that is hard to confiscate or block. That said, crypto comes with high volatility – Bitcoin can swing 50%+ in a year, which makes it unreliable as a short-term store of value. It’s also not yet truly “proven” in a global crisis (it didn’t exist in 2008, for example). And an autocratic U.S. might try to ban or control crypto (though enforcement is challenging). Nonetheless, allocating a small amount (e.g. 1-5% of net worth) to crypto could provide asymmetric upside if fiat currencies falter. It also potentially serves as a geopolitical hedge – for example, if you ever needed to leave the country quickly, crypto is one asset you can carry with you by memory or on a hardware wallet, whereas moving gold or cash can be restricted. Bottom line: Crypto is a speculative hedge – it could pay off massively in a scenario of currency crisis, but it could also suffer big drawdowns due to market dynamics. Only invest an amount you are willing to see fluctuate wildly. If you do, focus on the most established, like Bitcoin (and perhaps Ethereum), and practice good security (self-custody in a hardware wallet, not leaving on exchanges).
Foreign Real Estate: Owning property abroad can be both an investment and a hedge. As discussed, real estate in politically stable countries often attracts investors from unstable regions as a safe havenknowledge.wharton.upenn.edu. For you, buying a property overseas (say a condo in Canada or a small property in Europe) could provide: a diversification of assets (tied to a foreign economy and currency), potential rental income, and even a bolt-hole option (somewhere you could live or retreat to if needed). Of course, direct real estate comes with hassles – maintenance, legal considerations, differing property rights. It’s also relatively illiquid and involves larger capital outlay. An alternative is to invest via international real estate funds or REITs, which is much simpler. For example, there are global REIT ETFs that include properties in Europe, Asia, etc. These would respond to global real estate trends and can be a proxy if you don’t want to physically buy property abroad. The performance of foreign real estate will depend on local conditions – e.g. if the U.S. is in recession but, say, Southeast Asia is booming, your investment in an Asian REIT could be doing fine. Also, foreign real estate often moves inversely to the dollar (property in Europe becomes more valuable in USD terms if the euro strengthens). One thing to consider: some countries offer residency or other benefits if you invest in property (the so-called “Golden Visa” programs). While that’s outside pure investment discussion, it’s a potential perk – a second residency could itself be a hedge against U.S. instability. In any case, whether directly or via funds, adding international real estate exposure would enhance your portfolio’s resilience, given real estate’s tangibility and income and the geographic diversification it provides.
Inflation-Protected Bonds (TIPS and I-Bonds): We’ve touched on these in the emergency fund, but as a broader investment, TIPS (Treasury Inflation-Protected Securities) are a core hedge against inflation. They are low-risk (backed by U.S. Treasury) and pay a fixed real interest rate on top of inflation. For instance, if inflation is 5%, a TIPS with a 1% real coupon pays ~6% nominal. In the 1970s scenario, if TIPS had existed, they would have maintained or increased purchasing power, unlike regular bonds. They are a good antidote to stagflation for the conservative part of your portfolio. One way to include them is via a TIPS fund or laddering individual TIPS to maturity. Series I-Bonds are essentially savings bonds that work like TIPS (adjusting semiannually for inflation, with a small fixed rate). They are excellent for retail investors, aside from purchase limits and the 1-year lockout. You already have I-Bonds; consider continuing to purchase the max each year for you (and a spouse if applicable) as long as inflation remains a concern. Both TIPS and I-Bonds protect you if the government prints money or if inflation surprises to the upside. However, note: if your fear is an underreporting of inflation by an authoritarian government, then TIPS (which are linked to CPI) might under-compensate if CPI is tampered with. This is only a concern in a truly untrustworthy regime. In such a case, market-based inflation hedges like commodities or gold might be preferable. But short of that extreme, TIPS/I-Bonds are straightforward, no-brainer hedges for the moderate inflation scenarios. Other Alternatives to mention briefly: There are other niche assets sometimes considered: commodities futures funds (we covered commodities in general – an index fund can suffice if you want that exposure), collectibles like fine art or whiskey (can hold value but are illiquid and not recommended unless you’re passionate/expert in them), private equity or hedge funds (beyond scope and not really a recession/autocracy hedge specifically), and foreign currencies (holding currency itself we mentioned – one can also buy currency ETFs or hold a basket of currencies as an “anti-dollar” play).Given your goals, the alternatives that likely make sense are gold, maybe a small crypto allocation, some TIPS/I-Bonds, and possibly international real estate/REITs. Each serves a purpose:
Gold = crisis and inflation hedge, non-fiat store of value.
Crypto = technology-enabled hard asset, with censorship-resistance (hedges extreme political risk).
Foreign real estate = tangible asset outside the U.S., plus potential income.
TIPS/I-Bonds = reliable inflation hedge with principal safety. Performance-wise, we have evidence for gold and real estate in past inflation (they did well), and anecdotal evidence for crypto in recent authoritarian inflation cases (Venezuela, etc., where people turned to Bitcointime.com). TIPS have the backing of the U.S. Treasury, so they’re only as good as the U.S. government’s willingness to honor the inflation adjustment – which has been solid policy since they were introduced in the 1990s.

The trade-off with alternatives is often lower long-term return in exchange for protection. Gold and TIPS, for instance, won’t likely beat equities over a 30-year span in a normal scenario. But you include them so that in abnormal scenarios you don’t lose too much. It’s all about the risk/reward mix you’re comfortable with. A possible approach is the “Permanent Portfolio” concept (by Harry Browne) which splits assets 25% each to stocks, long bonds, gold, and cash – it’s very safe across all environments but sacrifices some growth. You don’t need to go that far, but it illustrates how spreading to alternatives dampens portfolio swings.In implementing alternatives, stick to modest percentages. For example, 10% gold, 5% commodities, 5% crypto, 10-15% TIPS, etc., within the overall allocation. These slices can significantly improve your worst-case outcomes without unduly dragging on performance in base-case scenarios.

6. Risk Management for a Potential Job Loss or Market Crash

Finally, given you work in tech (with $92K in unvested company stock) and have a high exposure to equities, it’s wise to plan for a tech downturn or personal layoff. This is a more immediate, personal risk (compared to macro risks above), but it intersects with your finances. Here’s how to ensure liquidity and stability if your income stops or markets plunge:

**Maintain and Right-Size Your Emergency Fund: As discussed, have at least 6 months (preferably up to 12) of living expenses in very liquid form. This should cover rent/mortgage, utilities, food, insurance, etc., so you’re not forced to sell investments while unemployed. Revisit your expense needs and make sure your current ~$60K (cash + I-Bonds) emergency allocation is sufficient for 6-12 months of bare-bones living. If not, redirect some savings to top it up. This fund is your first line of defense in a layoff or recession. It prevents a bad situation (job loss) from becoming worse (having to liquidate stocks at a market bottom to pay bills).
Diversify Away from Company Stock: That $92K in unvested company stock is likely tied to your tech employer’s fortunes. It’s great if your company does well, but in a tech downturn, not only could the stock drop, but your job could be at risk at the same time. This is the classic double-whammy to avoid. Plan to sell or reduce company stock holdings as soon as you are able (when they vest, and subject to tax considerations and any trading windows). Many financial advisors recommend not having more than 5-10% of your net worth in your employer’s stock for this reason. You can reinvest those proceeds into your diversified portfolio (spreading across other sectors and assets). This way, if the tech sector or your firm hits hard times, you won’t lose your income and a huge chunk of net worth simultaneously. It’s a tough emotional call, since selling your company stock might feel like lack of faith, but remember your overall financial health is at stake. You can still benefit from being an employee without concentrating your wealth in the same basket.
Ensure Access to Credit and Liquidity Buffers: In addition to your emergency fund, set up any backup liquidity before you need it. For instance, as noted, consider opening a HELOC against your home now, while you’re employed and rates are reasonable. This gives you a credit line to draw on if you face a cash crunch during unemploymentlendedu.com lendedu.com. Also, check your credit score and keep it high – good credit can help with personal loans or credit card offers in a pinch (some 0% APR introductory offers can temporarily finance expenses). Having available credit is not to encourage debt, but as a safety net. If you do lose your job in a recession, banks tend to tighten lending, so you want these lines available beforehand. Another tip: keep an eye on your unemployment benefits eligibility and, if you have stock options that expire after termination, have a strategy for those (they might need cash to exercise). In general, liquidity is king during layoffs – the more sources of cash (savings, credit, sellable investments) you have, the longer you can sustain and the more flexibility you have to wait for a good next job or to ride out a market recovery.
Consider a More Defensive Investment Stance if a Crash Looms: It’s notoriously hard to time markets, but if you have specific concerns about a near-term crash coinciding with potential job issues (say, you see trouble in your company or industry and stocks are at highs), you might temporarily tilt more defensive. This could mean keeping an extra chunk in cash or short-term bonds, or using options hedges (like buying put options on the S&P or on your company stock) to protect against a drop. For most long-term investors, riding out volatility is fine, but if a job loss would force you to dip into investments, then protecting those investments in the short run becomes more important. Think of it as extending your runway. For example, some people in vulnerable jobs reduce their 401(k) stock allocation a bit when recession signals rise, to preserve capital (planning to raise it back later). This is a personal choice and must be weighed against long-term goals – you don’t want to derail your retirement plan due to fear. But it’s an option to be slightly more conservative with investments until your employment is secure.
Build Skills and Networking (Career Hedge): Though not a financial asset, your human capital is huge. In a fast-changing or recessionary environment, having up-to-date skills, certifications, and a strong network is a hedge against prolonged unemployment. It might be worth investing some time/money now in learning new in-demand tech skills or maintaining a strong professional network. That way, if you are laid off, you can rebound faster, minimizing the time you’d need to tap savings. Some even establish a side hustle or freelance gig that can be ramped up if needed, providing alternate income streams. From a financial perspective, any secondary income reduces strain on your portfolio during downturns.
Insurance and Other Safeguards: Check that you have appropriate insurance coverage. Health insurance is crucial (COBRA or ACA marketplace plans if you lose employer coverage). Disability insurance is worth considering if you don’t have it – a medical issue can coincide with or cause job loss. Also, if you have any significant debts (like a mortgage), having an emergency plan for those (such as knowing the process to request forbearance or having enough set aside for a few months of payments) will prevent default. Some people also keep a “go bag” financially – copies of critical documents, account info, etc., so that in any urgent scenario (from natural disaster to needing to relocate for a new job) you can smoothly manage your finances. In essence, liquidity and flexibility are the cornerstones of managing job loss risk. By securing ample cash reserves, avoiding over-reliance on any one company or asset, and preparing contingencies, you ensure that even if a recession and layoff hit concurrently, you won’t have to make ruinous financial decisions. You can safely ride out a period of no salary, and your long-term investments can be left intact (or even rebalanced opportunistically) rather than sold in panic. With these safeguards, your portfolio strategy (as detailed in sections above) has the breathing room to work over the long run.

Conclusion

By incorporating these strategies, you can transform your $1.7M portfolio into a robust, all-weather portfolio positioned for long-term growth and resilience. The overarching themes are diversification and quality: diversify across asset classes (stocks, bonds, gold, real estate, etc.), across geographies (U.S. and international), and even across currencies and asset custody, to guard against any single failure point. History has shown that those who spread their investments wisely – and include non-traditional hedges – fare best when the unexpected happens.Concretely, you might end up with a portfolio that includes U.S. stocks, foreign stocks, some emerging markets, inflation-protected bonds, some foreign bonds, a stash of gold, perhaps a bit of Bitcoin, and real estate exposure – plus a solid emergency fund and liquidity buffer. Such a portfolio may underperform a 100% U.S. stock portfolio in roaring bull markets, but when the tide goes out, you won’t lose your shirt. In fact, you’ll likely find that when U.S. stocks zig down, something in your portfolio zags up (gold, for example, often rallies when equity investors panicwww.voimagold.com). This balance provides peace of mind and the ability to stay invested through turmoil.

Finally, it’s worth noting that while we prepare for worst-case scenarios, we still expect base-case outcomes to be positive. The hedges discussed are like safety equipment – you hope not to use them, but they’re there just in case. In the meantime, your growth engines (equities, etc.) are still working for you. By hedging the downside, you put yourself in a strong position to avoid panic selling and instead potentially buy when others are forced to sell. For example, if a U.S. recession hits and your gold and TIPS are up while stocks are down, you could rebalance – selling a bit of gold high to buy stocks cheap. That’s how savvy, diversified investors turn crises into opportunities.In summary, the key recommendations are:

Rebalance your asset allocation to include significant non-U.S. exposure and real assets (gold, commodities, real estate) alongside equities, to hedge U.S.-specific risks like recession or political instability.
Protect your short-term needs with an inflation-proof emergency fund and backup liquidity, so you never have to dip into long-term investments at a bad time.
Learn from history – no single asset is invincible, so use the tried-and-true hedges (gold for crisis, stocks for growth, cash for deflation, etc.) to cover all bases.
Go global – spread investments across countries to not be at the mercy of any one nation’s fate (even the U.S.).
Include alternatives like gold and possibly crypto in moderate amounts, as they can provide unique protection against fiat currency and systemic risks.
Plan for personal risk – job loss or industry downturn – by reducing concentrated bets (like company stock) and maintaining ample liquidity and credit access. With this approach, you can pursue long-term growth confident that you’ve mitigated the major threats to your financial future. You’ll have a portfolio that is not only built for sunny days, but also has the umbrella, life raft, and insurance policy ready for whatever storm might come.