Since the Falkland’s War
Since the Falkland’s War, profiting from war and the loss of young lives has always left me with a sense of unease. I’m content to leave that pursuit to politicians whose narrow-mindedness often serves as the catalyst for many conflicts.
I’m not here to preach about maintaining a higher moral ground because, quite frankly, I’m the last person to be judgmental. However, making money from people’s suffering and death just doesn’t sit well with me.
That being said, we cannot simply turn a blind eye to global events and how they might impact financial markets.
In my previous article, I discussed the opportunities within the commodity markets and emphasized that any significant dips should be viewed as chances to invest in a diverse range of commodities: oil, gold, copper, aluminium, wheat, and corn. I anticipated these commodities would rally before the year’s end.
Furthermore, I noted that, given the relatively low values, any market shocks should favour commodities rather than dampen their prospects, as much of the pessimism regarding the economy was already reflected in the prices.
We can never predict disasters and market shocks (unless our spouse happens to be a politician), but many of our decisions are unintentionally influenced by these events due to their historical impact on price data that we observe on our charts.
Those who base their trading and investment decisions solely on technical analysis, whether they follow trends or take a contrarian approach, can adhere to their patterns and indicators without factoring in global events. They’ll be proven right or wrong by the changes in market prices. However, those who consider both fundamental and technical analysis may find their strategies thrown into disarray when unexpected shocks occur.
As an Old Man with a keen interest in geopolitics, I’ve witnessed numerous shocks to our markets and have seen many investors either succeed or fail due to knee-jerk decisions made in response to disaster or crisis announcements. Regardless of profit or loss, decisions driven by knee-jerk reactions are hardly strategic and are particularly challenging to manage from a risk perspective.
The pundits in both social and mainstream media will offer their opinions on such events, claiming they were right to bet on gold or unlucky to hold equities. However, let’s be fair; if nobody saw an event like Hamas launching rockets into Israel coming, they can hardly be considered experts on Middle East affairs. Their predictions about what comes next hold no more value than yours or mine.
As a general indication, after a crisis initially jolts the markets in one direction or another, the initial volatility typically subsides, and the market continues along its previous trajectory. Of course, the markets will experience turbulence, and stop losses will be triggered as impulsive traders act like ambulance chasers, getting involved without a coherent strategy or plan.
The unfortunate reality is that much of what influences our markets is rooted in political interference and decisions. While we all understand that we can’t place much trust in politicians, we increasingly need to take political developments into account when making investment decisions.
For younger members of the investing community, this is a departure from the past.
Before globalization took hold, before governments wielded interest rates as a political tool, and well before politicians and central bankers grasped the workings of printing presses, our decisions were primarily based on supply and demand, economic growth, and shifts in societal needs. I emphasize “societal needs” and not the manipulation of society by increasingly influential governments and lobbyists.
In the past, we could estimate population growth patterns, anticipate how rising incomes would affect consumption, and primarily focus on monitoring supply to gauge whether prices would rise or fall. While admittedly simplistic, there is much truth in this.
There was a greater sense of harmony in bygone days. We still faced crises and shocks, some of which led to incredibly volatile market movements, but our politicians, many of whom had lived through wars, could generally be trusted to work towards peace and restoring stability to our nations and economies.
Over the past 30 years, however, all of this has changed, and it’s a cause for concern.
The individuals most affected by these political manoeuvres are the underprivileged in the Middle East, whose lives are treated as political pawns and mere statistics for politicians to manipulate as they see fit.
As investors and speculators, our world has transformed, and we are now little more than pawns, considered nothing more than asset-owning targets to be utilized and discarded at the convenience of our political masters and their influential institutional puppeteers.
I’ve repeatedly mentioned in various reports that welcoming government involvement in the cryptocurrency arena poses more of a threat than a benefit. Today, I must warn people that, regardless of what politicians say, the blockchain industry has unleashed digital identities and central bank digital currencies (CBDCs) from their proverbial bottles. No matter how unnecessary these developments may seem, the genie is out, and returning it is unlikely.
If you have doubts, consider this: Under the previous U.S. administration, significant efforts were made to maintain peace in the Middle East and foster understanding among opposing parties. The result was a period of peace, harmony, and economic growth—not for everyone, but for many.
Just three years later, which isn’t a long time in the grand scheme, a new administration has brought about substantial changes. Despite all the promises, we aren’t any wealthier, and the world isn’t any safer.
More importantly, as investors, we must diversify to better protect our assets, regardless of what we’re told or encouraged to believe.
How you do this depends on your circumstances, and how far you are away from a war zone!
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