Mr. Potato-Head Vs Humpty-Trumpty

Reality truly is stranger than any fiction one can imagine. A work of fiction requires a certain level of plausibility, otherwise, it risks being deemed irrelevant. Reality, of course, has no such requirement. Who would have taken seriously any fictional work that had a hermit society, led by a child dictator who looks like Mr. Potato-Head with a bad haircut, facing-off against the mightiest nation on the planet whose elected leader is a clueless psychologically challenged 70-year old child (reminiscent of Humpty-Dumpty without a wall) who was installed by Russian hackers? Who could even conceive of such an implausible scenario? But here we are.

From an investment perspective, this absurd reality must be considered with even more dispassion than normal. Since no one knows where the future will lead us, we have to make investment decisions based on cold calculation, not hot rhetoric. How likely is it that the US will launch a preemptive strike (nuclear or otherwise) against North Korea? Zero. How likely is it that North Korea launches an attack on the US? Zero. In America’s case, even though the Donald is insane and suffering from some form of dementia, it takes more than the president acting alone to launch a nuclear attack. And as far as North Korea is concerned, when it comes right down to it, the couple of thousand ‘elites’ that benefit from running what is essentially a slave colony are unlikely to do anything that would guarantee the destruction of their ‘gig’. How much long-term damage will empty threats and loose rhetoric have on the advanced economies? Zero.

As we commented earlier in the week, buying gold as a hedge against nuclear war is a ridiculous wager to make. How do you collect if you win your bet? If there was a nuclear war, gold and every other investment — other than perhaps nuclear bomb shelters, iodine pills, and food — would be worthless. There is no way to profit from nuclear annihilation.

The stock markets were over-due for a correction, but even the South Korean market will recover because their will not be a nuclear war and the only GDP that will be affected is that of North Korea.

Nothing has changed, the bull market continues, and gold has yet to breakout into a new bull market.

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Forty years of private equity trading, and still learning.

Forty years of private equity trading, and still learning.