Protecting your capital during a war
Wars are one of the greatest destroyers of capital.
In Barton Bigg’s book “Wealth, War & Wisdom”, he makes the case that to protect your capital during a war, investors need to own diversified portfolios of stocks and property in safe regions. The book chronicles the experience of investors during World War II: whose wealth was destroyed and why. And what you could have done to protect your wealth.
Biggs comes to the conclusion that the following asset classes were best at preserving wealth, ranked from best to worst:
1. Survival goods
Prices for daily necessities shot up during the war. And so, the people who got rich were often the black marketers. The black market was the most lucrative profession
and the best source of wealth as the war raged on. Stocks, land, real estate and businesses on the other hand, worked only if you had a very long-term horizon.
What black marketers did was hoarding survival goods such as clothing and food and then selling them at high prices to desperate f…