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Hey dividend hunters! If you’ve been watching the markets lately, you’ll know things are looking… well, surprisingly good.

The S&P 500 is at record highs. Singapore’s STI is nearing its own multi-year peak. Volatility is low, confidence is high — and investors seem to be taking it easy again.

Just last weekend, I talked about a high-yield ETF offering a whopping 15% yield with monthly payouts — and many of you were excited about it. And to be fair, there are good reasons for optimism right now.

Some analysts say this is simply the market pricing in soft landings — that interest rates are peaking, inflation is under control, and corporate earnings are holding up well.

Goldman Sachs, for example, recently noted that markets have responded more calmly to new tariff announcements — suggesting that risks are already priced in, or won’t be fully followed through.

But on the flip side, some major institutions are starting to sound the alarm.

Leaders at Amundi, PGIM, and even JPMorgan CEO Jamie Dimon are warning that a dangerous level of complacency is setting in. That markets are simply assuming that nothing bad will actually happen — even when the warning signs are right in front of us.

So in today’s post, I want to take a closer look at this tension:

Why are markets rallying so strongly — and is this optimism well-placed? Or is the calm before the storm?

More importantly, I’ll share how I’m preparing my portfolio — not out of fear, but out of discipline. 

Before we dive in, let me remind you that this post is for informational purposes only and not financial advice. Always do your own research and consult a licensed financial adviser before making any investment decisions. I own some of the REITs and shares discussed, but what works for me might not work for you.

Let’s dive in.

What’s Driving the Rally… and Why It Might Be Misleading

So why are markets — both in the US and Singapore — rallying so strongly?

One major reason is that investors have grown used to policies sounding worse than they turn out to be.

Take the recent tariff threats as an example. In April, when sweeping levies were first announced, markets reacted sharply — but just days later, those same markets began rebounding. Since then, every new announcement — even the latest round of tariff threats against Japan, South Korea, Brazil, and others, with proposed levies of up to 60% — has barely moved the needle.

Why? Because the market believes that while the headlines may be aggressive, the eventual outcome will be watered down, negotiated, or delayed. Investors are essentially saying:

“Yes, the rhetoric is loud… but it probably won’t end up being that bad.”

In other words, markets have come to expect that most policy shocks will be softened before they do real damage — and that growth will carry on as usual.

This belief has helped keep volatility low, credit spreads tight, and risk appetite high. Even bond yields have stayed relatively tame, suggesting that investors aren’t pricing in much lasting disruption.

But here’s the issue: when markets are built on confidence that everything will be fine, there’s very little room to manoeuvre if just one of those assumptions breaks.

And as we’ll see next — there are already some signs that not everything is as stable as it seems.

Hidden Risks That Could Break the Calm

Now let’s talk about the risks that the market seems to be brushing aside.

First — tariffs. If the announced tariffs on countries like Japan and South Korea are fully implemented, we could see a sharp hit to global trade, supply chains, and investor confidence. That’s a recipe for a risk-off correction.

Second — the US deficit is ballooning. If bond markets start reacting, interest rates could spike, putting pressure on valuations, especially for income assets like REITs and dividend stocks.

Third — the US dollar is weakening, and some institutions are questioning whether the US still holds its “safe haven” status. If that confidence breaks, we could see sudden shifts in capital flows and currency volatility.

Fourth — institutional credibility. Political interference in central banks and broader rule-of-law concerns are raising eyebrows among global investors. If these concerns deepen, we could see a wider re-pricing of US assets.

Any of these risks alone could shake the markets. But if more than one plays out together, the current calm could turn quickly into broad-based volatility.

And while these are primarily US risks — Singapore is not immune.

Our STI is heavily influenced by global capital flows. Many of our largest companies are linked to trade, exports, and regional demand. If global risk sentiment turns, Singapore markets will feel it too — and sometimes faster than expected.

If you’ve made it this far and haven’t clicked away to check your portfolio, do this uncle a small favor — give the post a ‘like’! It tells the algorithm I’m not just mumbling to myself in a corner. And if you haven’t subscribed yet, join the growing group of folks who prefer stability over rollercoaster stocks. We may not be fast, but hey, we’re steady. 

Not All Doom And Gloom: Stay Grounded, Stay Selective

Now, after laying out all those risks, let’s be clear — this isn’t a “doomsday” message.

There are still valid reasons why markets — especially in the US — could keep climbing.

Corporate earnings have held up surprisingly well. Many companies are still growing revenue and profits, even with higher interest rates. And let’s not forget the ongoing boom in AI-related investments, which is creating genuine productivity gains and long-term potential for growth.

So it’s entirely possible that this market rally continues for some time — especially if economic data stays strong and policy risks are deferred again.

But that’s exactly why this is a time for disciplined optimism — not blind optimism.

Because underneath the surface, the risks are real — and if they catch investors off guard, the pullback could be sharp.

Which brings us to Singapore.

Even if global markets turn volatile, Singapore still stands out as a relative safe haven. We’re AAA-rated, politically stable, and the Singapore dollar tends to hold up well when global uncertainty rises. Investors trust our institutions — and that matters when sentiment shifts.

So for those of us based here, keeping most of our capital in SGD-denominated assets still makes a lot of sense.

But what’s more important is where we put that money within the Singapore market. This is a time to position thoughtfully, not passively.

The Dividend Uncle’s Take

So here’s how I’m thinking about all this.

The markets are at record highs. Risks are clearly out there. But I’m not panicking — I’m getting ready.

Now, let’s be clear — no one can say for sure when this rally will end. Markets can stay overvalued for a long time. Sometimes, what looks like overvaluation gets justified when earnings catch up — especially in sectors like tech or AI. So, I’m not here waving a red flag saying “get out now.”

But on a portfolio level, we can be smart about tilting our positions. It’s not about predicting the exact turning point, but being ready if and when it comes. And that’s where being selective really matters — both across geographies and asset classes.

So my approach?

I’m staying invested — but I’m positioning more carefully. 

Firstly, I’m reviewing positions in more cyclical or globally exposed names. Where my US stock holdings have significant gains, I’m realising some of the profits. Sure, it’s painful to see prices go even higher after I’ve sold — but discipline matters more than pride at this point.

Secondly, I’m looking for SGD-denominated assets that give me stability and income.

• Some REITs are still trading at discounts, despite stable rates and solid fundamentals. Look out for my upcoming posts on which I’m buying.
  
• Defensive dividend stocks like NetLink or Sheng Siong may offer yield with less sensitivity to global shocks.
  
• Short-duration or high quality SGD fixed income can help preserve capital while staying flexible.

Finally, I’m keeping some dry powder in cash or money market funds — not to time the market, but to be ready if we get volatility or better entry points.

In other words, I’m not betting on a crash — I’m just not assuming that everything will go perfectly either.

It’s about staying grounded, staying steady — and being ready when others aren’t.

That’s all for today, folks. The market looks strong. The charts look bullish. But beneath the surface, the warning signs are there — and complacency is creeping in.

As long-term investors, our job isn’t to predict every short-term move. But we can be alert, disciplined, and ready — especially when others are letting their guard down.

Let me know in the comments — and if you found this post helpful, give it a like and subscribe for more steady, grounded investing insights.

Until next time, stay safe, stay steady — and happy investing.