Kurt Schiltknecht, former Chief Economist, Swiss National Bank:

Stagnation in the West. (Image: Courtesy)

Financial markets have so far weathered political turbulence well, thanks to interest rate cuts. However, it remains uncertain whether this trend will continue, even with expected further rate cuts. This is particularly concerning as U.S. debt continues to rise rapidly, even after Donald Trump's election.

The dollar as the world's reserve currency is only slightly affected due to the lack of an alternative. For the euro, however, debt is a bigger problem, further exacerbated by excessive regulation. Europe is also grappling with a shrinking population, a challenge that will soon impact financial markets. Stagnation is expected in the Western industrialized nations.

Swiss companies will be less affected by these challenges the more independent their economic policies are. Given the many issues at hand, holding a high proportion (30 to 40 percent) of liquid assets in the portfolio makes sense. Given the uncertainty surrounding the impact of escalating Western sanctions and the resurgence of trade disputes on companies, investing in quality index products appears more prudent than stock picking.