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According to traditional financial theory, markets are a game of balance: When U.S. stocks fall, assets like U.S. Treasury bonds and the dollar — considered safe havens — typically rise.

But over the past 10 months, the global financial compass has kind of lost its North Star, and investors have periodically moved away from all three major U.S. asset classes — equities, government bonds, and the dollar — at the same time. Wall Street analysts are calling these episodes of collective retreat the “Sell America Trade.”

At its core, this trend suggests investors aren’t as confident in the U.S. as they used to be. Hedging their risk has become less about rotating money within the U.S. ecosystem and more about going somewhere else altogether. Money has flowed to international markets, foreign currencies, and precious metals, leading to a dramatic drop in the value of the dollar, a record-breaking runup in gold, and thousand-point swings in the Dow Jones Industrial Average.

The initial catalyst was President Trump’s “Liberation Day” tariffs last April, according to some analysts. The aggressive new tariffs fundamentally rewrote U.S. trade and foreign policy, raising fears of prolonged economic and geopolitical uncertainty.

But several events last month raised fresh concerns. U.S. military intervention in Venezuela and sanctions on Iran created new political instability, while an unwelcome attempt to acquire Greenland cast doubt on many long-kept U.S. alliances in Europe. On the domestic front, the Justice Department launched a probe into the Federal Reserve and its chairman, calling into question the central bank’s independence and long-term institutional credibility.

Of course, “Sell America” is by no means the norm: All three asset classes don’t fall together on a regular basis, and it’s unclear how profoundly investors are being influenced by these events.

“Concerns about a sweeping ‘Sell America’ trade are greatly exaggerated,” Larry Adam, chief investment officer at Raymond James, wrote on Jan. 30. Data on foreign holdings of U.S. stocks and Treasurys continue to show there’s a healthy demand, he said, and despite the recent volatility in the market, he doesn’t foresee a fundamental shift away from U.S. assets.

But Frederick Kempe, CEO of the Atlantic Council, said it’s troubling that the world is hedging its U.S. bets.

“For decades, the world chose the dollar without thinking about it all that much, and that was not only because of unrivaled American economic strength. Most of the world’s major economic players also trusted the United States’ financial leadership — its rule of law, its institutions, its predictability,” Kempe wrote in a recent column on the thinktank’s website. “That trust is what’s eroding.”

So what?

U.S. assets don’t have the same gravitational pull they’ve had in the past. Rather than holding them by default, global investors are increasingly reassessing the risks they carry.

This means that investors can no longer take conventional market dynamics for granted. It also means risk can emerge in unexpected places. It’s worth evaluating your total exposure to ensure you’re properly diversified. And remember: You don’t have to predict the next big turn in the market. You just have to build a portfolio that can withstand it.

Related Readings

•  What Is Sell America and Why Did It Happen (EBC Financial Group)

•  Debunking the ‘Sell-America’ Trade: Why Europe’s Move Could Fall Short (J.P. Morgan Private Bank)

•  This Could Be the Most Important Number in the 'Sell America' Trade (Barron’s)

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