The past 70 years have been, despite everything, among the most peaceful in human history, largely due to the overwhelming superiority of American power. The Pax Americana worked and, like any multigenerational state of affairs, is now taken for granted.
Bringing this back to the investing arena, think about how we normally analyze the world. You routinely see the word “postwar” on data sets. Most analyses implicitly assume that peace is now a given. And many analysts explicitly assume that, with the global economy as integrated as it is and most countries now organized around free markets and making money, a war would be irrational.
In an entirely rational world, of course, that conclusion makes sense. In fact, it has been reached before, several times. The most pertinent example was a book by a Briton named Normal Angell, called The Great Illusion, which argued that war between industrial countries made no sense. It was widely read and praised at the time of its publication—in 1909.
Brad McMillan is the chief investment officer at Commonwealth Financial Network, the nation’s largest privately held independent broker/dealer-RIA. He is the primary spokesperson for Commonwealth’s investment divisions. This post originally appeared on The Independent Market Observer, a daily blog authored by Brad McMillan.