I mentioned in a previous blog post a book entitled “Wealth, War and Wisdom” by Barton Biggs which covers how the turning points of World War II intersected with market performance. I have now read it and I am surprised that this book is not better known. It’s a very good analysis of how the wars of the 20th century impacted stock markets and the wealth of individuals. It probably should be essential reading for residents of the Ukraine at this moment in time, but it’s worth everyone reading it.
Does the stock market predict wars and their impacts is one question he tackles. The answer is yes and more accurately than political commentators it seems in many cases.
Here are some tips from the book that might be helpful:
- Stock markets recover when the news stops getting worse, and before good news appears.
- Equity markets have been a good protection against loss of wealth even in countries that suffered defeats, particularly in the long-term. The economic recovery of Japan and Germany after the Second World War soon offset their losses during the war.
- Bonds are a losing investment in real terms whether you are on the winning or losing side. Inflation erodes their value because Governments print money to finance wars.
- Buying gold only works if you bury it in the back garden, as otherwise it’s likely to be confiscated.
- Property, particularly farms you live on, or small businesses you operate, are good investments even in the worst times.
The author actually covers the history and battles of World War II in some depth and it’s a refreshing and well researched analysis even for someone like me who is old enough to have read about a lot about the era in the 1960s and since. It provides some wonderful anecdotes and facts about how those wars created suffering for many millions of people.
The book was published in 2007. The author, Barton Biggs, was born in the USA and was an investment manager and strategist for Morgan Stanley. He made his name by forecasting the dotcom boom and bust which he called “the biggest bubble in the history of the world”. There is a fuller biography on Wikipedia.
Altogether a very original book which I highly recommend.
Roger Lawson (Twitter: https://twitter.com/RogerWLawson )
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