An an investment research firm warns that while there is a one in 10 chance of the Russian invasion of Ukraine ending in a nuclear catastrophe, investors should still be prepared to fill their wallets.
Canada-based BCA research released a note which assessed the growing risk of a nuclear war and found that even though there is an “uncomfortably high” 10% chance of “a nuclear war ending civilization,” investors should remain bullish. Analysts, led by Chief Global Strategist Peter Berezin, pointed out that, despite the dire estimate, there is a “huge” margin for error.
“Self [Vladimir] Putin concludes that he has no future, the risk is that he decides that no one else should have a future “, reads a summary.
The researchers added that even if World War III is averted, global markets could be shocked by the collective panic of the situation in the coming weeks, which could lead to a scenario similar to the start of the coronavirus pandemic. During the onset of the pandemic, stocks plummeted and often fluctuated wildly, although markets rebounded a few months later and trended upward until the Russian invasion of Ukraine.
SALES OF IODINE IN EUROPE FOR NUCLEAR WAR CONCERNS
The note from BCA Research argued that investors should ignore the threat of nuclear annihilation when thinking about their exposure to the markets because if the worst-case scenario does indeed occur, equity losses would still not matter.
“Despite the risk of a nuclear war, it makes sense to remain constructive on stocks over the next 12 months. If an ICBM is heading towards you, the size and composition of your portfolio becomes irrelevant,” they wrote. “So, from a purely financial perspective, you should largely ignore existential risk, even if you deal with it a lot from a personal perspective.”
“Bottom line: Armageddon risk has risen dramatically. Stay bullish on stocks over a 12-month horizon,” the report added.
Berezin made it clear eFinancialCareers which was not suggesting in the research note that stocks would increase if there was some form of nuclear warfare. Rather, he was suggesting that, nuclear war aside, the situation in Ukraine will cause stocks to drop, but will eventually recover.
He said that because it is impossible to financially prepare for a nuclear war scenario, investors only need to look at the 90% scenario that markets will fall into before recouping those losses at some point in the future.
“A time of panic is coming, which will present a good buying opportunity for investors,” he explained.
Global markets have been in disarray since the war in Ukraine. On Monday afternoon, the Dow Jones Industrial Average shrank about 1.7%, or about 575 points, while the Nasdaq fell 2.4% and the S&P 500 tumbled 2%.
Meanwhile, gold has risen to around $ 2,000 an ounce as investors flock to the safe haven. Gold was trading around $ 1,795 earlier in the month, up 11.4%.
The Bulletin of Atomic Scientists announced Monday that the so-called Doomsday Clock would remain at 100 seconds until midnight despite the war in Europe.
The group explained that although they did not choose to move the clock hand forward, considering that midnight is a metaphor for the end of the world, the global situation remains the worst since the clock was first set. in 1947.
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“For many years, we and others have warned that the most likely way nuclear weapons could be used is through an unwanted or unintended escalation from a conventional conflict,” the group said in a statement. “The Russian invasion of Ukraine has given rise to this nightmare scenario, with Russian President Vladimir Putin threatening to increase nuclear alert levels and even the first use of nuclear weapons if NATO steps in to help Ukraine.
“This is what 100 seconds to midnight looks like,” the group added.
Original position: The investment firm puts at 10% the chances of a nuclear war that “end of civilization” but says to buy shares
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