Rapid City financial advisor Rick Kahler: Possible threats to the rule of law put financial markets at risk
In recent weeks, the Trump administration’s legal maneuvers around deporting Venezuelan immigrants alleged to be gang members have ignited a dramatic confrontation with the federal courts. The administration proceeded with the deportations despite U.S. District Judge James Boasberg’s restraining order to halt them, arguing the flights fell outside the court’s jurisdiction. After the ruling, Trump called for Boasberg’s impeachment, a move backed by some Republican lawmakers and rebuked by Chief Justice John Roberts.
This may seem like political theater, until you realize what’s at stake. If a sitting president, or anyone in the executive branch, chooses to defy a court order, particularly one from the Supreme Court, we’re in a constitutional crisis. Many legal scholars believe we may be inching dangerously close.
According to Axios AM, March 23, 2025, even John Yoo, a conservative legal scholar and Trump ally known for his expansive view of presidential power, warned that defying a judicial order would be “a terrible mistake.”
I must admit that, in today’s hyper-polarized world, writing about this topic makes me uneasy. It’s hard to raise a red flag without someone assuming you’re waving a blue one. I try to stay in the middle of the road, less because I enjoy dodging traffic and more because that’s where pragmatic thinking tends to thrive. But it’s becoming harder to talk about facts without running into deeply entrenched cognitive biases that lead us to dismiss facts that don’t fit our worldview.
The real issue here is not political ideology. It’s not about whether we should deport criminals who are here illegally, cut wasteful government spending, or reform the government to be more efficient. Reasonable people can—and should—debate all of those. This is about implementing these policies within the structural integrity of the legal system that allows us to have those debates in the first place.
Our system of governance is built on checks and balances through a division of power among the executive, congressional, and judicial branches. As a financial professional, I pay close attention to the foundations under our economy. A crucial part of that foundation is the rule of law.
Markets don’t typically flinch at political noise. But when that noise begins to challenge the basic architecture of governance, like an independent judiciary, the risks change.
The rule of law is the quiet engine behind U.S. economic stability. It allows contracts to be enforced, property to be protected, and institutions to function with a degree of predictability. Investors rely on the idea that no matter who’s in office, the system itself is steady.
So far, the administration is claiming it hasn’t technically broken the law. But many legal and economic observers are uneasy. It remains to be seen whether this moment becomes a historical turning point or just another blip. If a Supreme Court ruling is openly defied, markets will notice. The financial world may not shrug off such a violation of norms.
Which brings us to a practical financial question for investors: what should you do?
If your entire stock portfolio is concentrated in U.S. equities, this may be a good time to consider aligning your holdings more closely with the global capital markets. Concentrating all your investment exposure in one country, especially one facing growing political instability and uncertainty, carries unnecessary risk. Allocating around 40% of your equity portfolio to international markets could provide meaningful diversification and a buffer if domestic instability begins to ripple through the financial system.
Whatever you do, it is essential to act from a place of prudence, not panic. And it’s prudent to remember that markets don’t just run on numbers. They run on trust.
Rick Kahler, CFP, is a fee-only financial planner and financial therapist with a nationwide practice, Kahler Financial Group, based in Rapid City. His co-authored books include Coupleship Inc. and The Financial Wisdom of Ebenezer Scrooge.
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