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Call for Thoughts - How Does a War Affect Capital Allocation Decisions?

Discussion in 'Business, Investment and Economics' started by StockyGuy, Jun 19, 2019.

  1. StockyGuy

    StockyGuy Observe, Discuss, Apply

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    Of course, from the start, I emphasise there's no intent to ignore the tragedy involved in armed conflicts. Likewise it's not really about questions over whether particular state or non-state actors may pursue or encourage a war footing simply to benefit financially. I suspect it happens and is despicable.

    As a humble mug punter, how does one respond to such a development?

    Given that no portfolio "stands still", we are either expanding or contracting, we would obviously aim for the former. A particular problem during protracted war is often inflation so putting money under the proverbial mattress is especially deleterious.

    It's a disgusting feature of the last century, and likely many others, that on the average the best, most heroic male specimens fall on the front line, and again on the average the lesser-calibre males remain and enjoy boom years (and a more favourable percentage of females). Boom years after both world wars were based on the economic stimulus of the preceding conflicts.

    Hopefully the concept of nuclear MAD (Mutual Assured Destruction) precludes another full scale world war ever occurring.

    I didn't want to tack on to kahuna1's Iran thread as that is very specific.

    I've never really been actively investing/trading during a significant major conflict. A lot of us here, I'm sure, do trade US stocks and derivatives - it's a massive, liquid market, with cheap brokerage costs. Say with Iran the US gets provoked beyond the point where mere increased sanctions are enough? Say China makes its move on Taiwan...USA is committed to assist? US stocks and currency WILL be affected in almost any conceivable major conflict across the globe. But not necessarily negatively, over time.

    What's your plan at the first declaration of war? Straight to cash? Straight to gold?! The Swiss franc?!! Do you just stick to business as usual trading plan? From a more fundamental perspective do you have a particular approach to riding the wave with military-industrial complex type shares?

    http://smedleyfinancial.com/wp/impact-of-war-on-stock-markets/

    https://www.businessinsider.com.au/...ock-markets-when-the-world-goes-to-war-2017-8
     
    Smurf1976 likes this.
  2. Smurf1976

    Smurf1976

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    This although gold, USD and oil are all things of potential relevance in the event of war and which are permanently on my watch list anyway such that investing in them wouldn't be a departure from business as usual. :2twocents
     
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