Existential Threats

Everyday we face multiple threats to our continued existence. Everyday, almost every person on the planet lives to face those same personal existential threats again tomorrow. And the day after, and the day after, until one day we don’t get to face them any longer. One of those existential threats came for us, like the Grim Reaper.

Personal Threats

From the everyday threats like walking under a bus or suffering a myocardial infarction to the less obvious but still potentially life threatening like being hit by falling space debris or dropping down a manhole without its cover, it’s a wonder so many of us make it through each day. Other individuals carry additional threats like living with cancer, working underground or on an oil rig. The threat list is endless but we tend to take precautions where we can and put the rest out of our minds so we can just get on with life. We get busy living.

Mass Threats

Mass events grab all of the daily headlines and reverberate in real time around social media. Mass shootings, terrorist atrocities, air crashes, tsunami, radio-active melt downs – they happen everyday or are seconds away every day. But so far we haven’t suffered from any of them although we still worry.

Global Existential Threats

These have never happened or I wouldn’t be here writing this and you would not be there reading this. Ceasing to exist globally is a big deal, ask the dinosaurs or the dodos, oh hang on you can’t. But humans and much of the planets flora and fauna hasn’t died out. Yet! But after billions of years we still worry daily about a mass-terminal viral or bacterial infection, a meteor collision, a super volcano eruption or an invasion from an extra-terrestrial civilisation. You won’t find these events very often on the front pages, but Hollywood has been kept going with blockbuster movies depicting the end (or very close to the end) of the world and/or mankind.

Now we come to the current existential threat.

Thermo-Nuclear Annihilation.

It’s a worry and has been since the first atomic detonation utilising J. Robert Oppenheimer’s work on 16th July 1945. Every single day since could have been the last for many and perhaps all of us. The atomic bomb ended WWII for the Americans and the rest of the world, but ever since the Japanese detonations in August 1945, the world has lived in perpetual fear of the power of such weapons.

So will this really be it this time? Could a political leader be so powerful as to get those around him to agree to spark a global nuclear holocaust? Will it be Putin? Because until recently many thought it would have been Kim Jong-Un or Saddam Hussein.

Most Likely Outcome

I would very much doubt that any one of us will have “Nuclear explosion or subsequent health issues” on our death certificate. It’s easy for me to say because if it’s on yours, it will be on mine too.

So let’s look at the most likely outcome.

Markets Recover

There has always been continuous conflict somewhere in the world. Stock markets have always suffered setbacks and risen in-between those sharp setbacks.

When the future looks rosy there is usually something that comes along to darken that outlook. In the darkest of times, better times are usually just around the corner.

I have just been asked whether we should hold more cash and buy gold. This isn’t an unusual question when investment values slip, but similarly when markets are climbing I am asked whether we should load up on some crypto-currency and internet start-up companies with no profits, loads of debt but an expectation of greatness. If we should be holding more cash and gold right now then I’m afraid we should also be stocking up on ammunition and gas-masks.

Feeling like outcomes are about to get worse is usually a bad indicator of the future. In fact it is often a good counter-indicator – many investors see this behaviour and understand things are now about to get better. They term it market capitulation.

The most likely outcome is the markets will bottom and then catch up quickly. This won’t be when the conflict in Ukraine is over, it will be when the future outcome politically starts to become clearer. The markets will rise again even with the fighting continuing, the bad news will have been digested and the recovery will begin.

We have to be in it to win it. We won’t be given the nod to sell the gold and buy shares once again. Having already sold shares at a low, we would be sure to need to sell a sliding price of gold and have to buy into a higher price for shares.

Believing in an economic recovery or total oblivion, I know what has worked for me so far when calculating the odds of either occurring. Let’s hope my optimism and my guidance based on what has transpired in the past isn’t misplaced this time.