I’m not talking about actual nuclear war where financial instruments wouldn’t matter, but more about how you can hedge during a geopolitical situation where nuclear war might seem likely.
I’m thinking the Cuba missile crisis could be the closest historical example. I asked a research tool and it suggested gold, US treasury bonds, or inverse ETFs. Is there a smarter way to handle this situation?
Look at the market from around 1947 to 1991 if you’re seeking a historical example. The Cold War had a constant threat of nuclear war and global destruction.
And yet… here we are. For better or worse.
@Ash
The SP500 didn’t seem to care much. Visual capitalist has a chart showing the size of different sectors. There weren’t obvious changes, maybe just a rise in materials and energy sectors around that time.
Gold, beans, and bullets.
You could try investing in defense stocks or things used during wars. Maybe chip stocks would be a good idea too.
If nuclear war really happens, I doubt my portfolio will matter anymore.
Janice said:
If nuclear war really happens, I doubt my portfolio will matter anymore.
That might be a valid point if OP asked about hedging against actual nuclear war, not the perceived risk of nuclear war.
It’s funny how people misunderstand investment advice and vote on it.
@Ember
It’s funny how people misinterpreted my question even though I tried to clarify with the asterisks around ‘perceived’ and the first sentence.
Reagan said:
@Ember
It’s funny how people misinterpreted my question even though I tried to clarify with the asterisks around ‘perceived’ and the first sentence.
I liked the effort! It made the situation even funnier.
Own land, lol. A large-scale nuclear war would be like Mad Max. The markets wouldn’t even be operating.
Rory said:
Own land, lol. A large-scale nuclear war would be like Mad Max. The markets wouldn’t even be operating.
Impressive how you didn’t even read the question halfway through.
OP asked about the perceived risk of nuclear war, not the real thing.
@Ember
Yeah, no kidding. If that’s what the risk is, that’s what’s going to cause things to skyrocket.
Thanks for the input.
Defense stocks that make weapons, medical stocks that supply the army, and federal treasuries make sense in this kind of scenario.
Buy VT, treasuries, and real estate for retirement from the start of your career until you retire. That’s the ultimate hedge against everything.
If nuclear war happens, we’re all in trouble, but if people are just talking about it, I think money would flow into defense contractors like General Dynamics, Northrop Grumman, RTX, and the like.
Seeds and ammo.
Whoever makes iodine tablets.
In times of global crisis, there’s often a ‘flight to quality,’ meaning people go to assets with perceived value and stability. Historically, this meant assets from places like Switzerland and the US, such as sovereign bonds, Swiss Francs, and US Dollars, along with precious metals. Look at what happened during Desert Storm.
Many wealthy people have already protected themselves with real estate in the US, London, Canada, and other countries.
As for today, who knows? Maybe Bitcoin or something random. The question is, when are we not dealing with geopolitical issues or political instability?
How can anyone really give you an answer when no one’s been through a nuclear exchange between countries?
You might be better off hedging against floods, hurricanes, pandemics, and civil disturbances. If you want to hedge against conventional war, just look at recent US market history—it’s been up and down through the years of constant wars over the past few decades.
Blackrock and chill.