Ballistic Missile Inbound!

And 38 minutes later, after all the sound and fury, it largely signifies nothing.

I have to admit, managing money is kind of a dream job. A lot of the time you do nothing besides sit, read, think, and read some more. Maybe go for a walk. If you’re doing the job right, you don’t have to react to every headline in a panic. So I’ve had plenty of time to read and think about the nuclear brinkmanship.

With a little bit of distance from the false alarm out of Hawaii it’s possible to take stock of what didn’t change:

  1. The world’s population continues to increase.
  2. Global demand for goods and services continues to increase.
  3. The United States (including Hawaii!) still exists.
  4. North Korea still exists.
  5. United States citizens continue to have trouble finding North Korea on a map.

All of the above points to capitalism continuing to exist. While consumer confidence in the US and around the world might decrease a little because of the saber rattling, which sometimes leads to reduced spending, which sometimes leads to lower corporate earnings, which sometimes leads to lower equity prices, which sometimes leads to higher prices in other assets, which … you get the point. The future is going to keep occurring and in a fashion that’s rather familiar with what’s been happening during the past century. Problems will continue to arise and need to be solved. There will be entrepreneurs, businesses, and capital available to tackle them (the government might even help too!).

And if the world does stumble into a nuclear holocaust and your account was positioned to profit from the end of the world then how’s your counterparty going to pay you?

What hasn’t changed is our inability to accurately predict which asset class will be the best performer over the next couple of decades. So stay diversified with stuff that produces cash flow, rebalance periodically, stick to your trading plan, and don’t panic.

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