(Bloomberg Opinion) -- Over the past decade, its almost been too easy for Americans to manage their wealth. A textbook 60/40 portfolio in its simplest incarnation, exposure to the S&P 500 Index and Treasury bonds was an effortless winner. The U.S. boasted the worlds best stock market, and bonds, apart from offering interest income, provided a nice hedge against equity risks.

Now we live in extraordinary times thatdemanda reshuffle. Swapping out some bonds for gold and some U.S. technology stocks for Chinese ones could offer a better hedge: Both can be consideredcredit default swaps against President Donald Trumps chaotic policymaking.

You could argue that the wreckage left byCovid-19, combined with whatsquickly shaping up to be a cold war between the worlds two largest economies,is the closest weve come to World War III. And just like wartime episodes of the past, were seeing disrupted global supply chains, border lockdownsand restricted movements in labor.

War is inflationary. The cheap car parts made in Chinas inland city of Wuhan can no longer land in the U.S., and your French wine could cost more as transportation logistics gettrickier.Moreover, the Federal Reserve has been flooding its financial system with cash. In just three months, assets held by the central bank ballooned by two-thirds, to almost $7 trillion. To make matters worse, the Fed is mulling a more relaxed stance towardinflation, ready to abandon preemptive rate hikeseven though consumer expectations have beenticking up since May.

As Ive argued in a recent piece for Bloomberg Businessweek, bonds are no longer effective equity hedges in an ultra-low-rate world that faces inflationary pressure; gold can do a better job. But after a neck-breaking rally, its natural to ask if werealready too late to the game.

History can be our guide. After the collapse of Lehman Brothers in 2008, gold broke out and continued marching higher until September 2011, even asTea Party belt-tighteners took control of the national narrative in the 2010 midterm election. A decade on, the Republican Partys libertarian wing has all but disappeared, and is replaced by a cross-the-aisle nod to modern monetary theorists, who brushaside fiscal austerity. The Tea Party is no longer here to sour the gold rally.

Meanwhile, since were at war, might it be smart tohedge against the possibility of losing? This cold war isnt over a plot of land or sea, but domination over next-generation technology.

The U.S. has the absolute advantage now, withchip and robotic designs far ahead of Chinas,but that edge is slipping away. While Washington is wrangling over trillions of dollars ofstimulusto fend off a recession caused by waves of coronavirus outbreaks, China, which has the pandemic relatively undercontrol, is only strengthening its tech resolve.

For Beijing, its killing two birds with one stone. The $1.4 trillion hard tech invesmentis the nations new fiscal stimulus package. Instead of building more roads to nowhere, China is installing 5G base stations.

Its high time to consider diversifying from U.S. stocks, anyhow. There have been nagging worries about the market being on a tear even withthe economy in the dumps. Meanwhile, Big Techhas become too dominant, with the top five mega-cap names now accounting for more than 20% of the S&P 500 and its entire gain this year. This mighthelpexplain why mainland firms that recently went public in New York are outperforming their U.S. counterparts, despite the Trump administrations attempt to delist China Inc.

Now, I am not advocating that investors plowtheir money into Chinas big tech companies, because they face the exact same problems that U.S. Big Techhas overbought stocks and impossible expectations. This years passive flows only worsened the concentration risk of benchmark indexes. Alibaba Group Holding Ltd. and Tencent Holdings Ltd. account for a third of the MSCI China Index and about 14% of the MSCI Emerging Markets Index.

Rather, investors should do their homework on smaller hard-tech companies. The truth is, once you identify a promising tech seedling, it doesnttake aventure capitalists patience to watch it blossom. Indias Reliance Industries Ltd. joined the Century Club stocks with over $100 billion market cap in just three months. Tencent is another example of a melt-up.

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Good wealth management is all about diversification. If youreunsure of Trumps wartime strategies, add some of gold and China exposure to your portfolio.

(Adds details on concentration risk of Chinas big tech companies in the 11th paragraph.)

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. She previously wrote on markets for Barron's, following a career as an investment banker, and is a CFA charterholder.

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