Hypothetical limited nuclear exchange

[MRG]

Don't be too optimistic. Remember post 9/11 the market was shut down for a week. Funds did not process, brokers closed.

I w*rked for a place involved in financial services. We honestly didn't know what would happen as the systems always ran nightly. That's how it worked.

You know all the data centers keep off site copies of data and have plans to relocate in X datacenter in city Y. Of course if the datacenter in city is not there or usable or you can't get to the data. That would be bad.

Most of the DR plans I've seen revolved around the datacenter gone but here's my system and data. Even Teir 5(redundant everything) datacenters are fairly close, few hundred miles due to latency. That's probably too close for a nuke party.

Cash, gold, guns, ammo, and liquor.

 

[Aerides]

With the premise of a "limited" event, that almost precludes not a NATO country, certainly not US (even Guam) or Canada, Europe, allies. Include any of them, and the definition of limited gets stretched too thin.

Likely, we'd wake up to the news. The markets would have already taken a big hit and losses would already be accounted. (strictly speaking financials here). So the "move it to cash" means you've already lost X%, hence a let-it-ride approach might be realistic, +go get lots of liquor.

I think the trick is to see conditions mounting and move a bit of your AA to a comfortable cash balance (N*Expenses) maybe a bit more than usual?

And yes once things are stabilized, a buying opportunity. Historically, there are usually profits to be made during wartime.

Oh and something Less Limited? I want to go out in the first strike. I've watched the Walking Dead enough to know I don't want to live after the apocalypse!

 

[Huston55]

How about buying Defense & Aerospace ETF call options? Like XAR?

I don't trade options but, would be interested in hearing from those who do.

 

[btdt22]

So here is the topic/question:

In the event of a limited nuclear exchange somewhere in the world and the prospect of a large disruption in trade relations, what would you do as it related to your personal finances and retirement portfolio?

I would first evaluate the situation, and using due-diligence choose between my options, unless of course I was vaporized and would have no need to do anything. At age 70, everyday above ground is a pretty good day for me regardless of the 'politics'.

 

[Sunset]

Come on folks, surely most of you grew up during the cold war.

I have been thinking about this, and while folks use the term limited, just taking a few hits would be pretty dramatic and I'll regret never seeing LA, NY, and I hope I'm far enough from Chicago center to avoid the initial blast.

It will be a surprise if it happens, and it might not happen or be years until it happens, so do I really want to alter my life over this?

My plan is to withdraw some cash, probably $5K, which will only soften the difficulties at first.
I'm also taking snapshots and downloading statements so I can prove what I had, when the bank says "we have no record".
I already have guns & ammo so I think I can deter looters, or feel safer on the road.
I can stock up on canned food, and booze, and enjoy them later if everything turns out fine.
Guess I'll keep the car gas tank filled more than 1/2 way all the time, instead of letting it get to less than 1/4 tank.

As for my finances/portfolio, if the world order falls apart, then it won't mean squat.

Or maybe I should just book a very long vacation in Australia

 

[cathy63]

Under the current threat it will be a west cost hit, I would think twice about those futures.

I don't speculate in commodities at all, so I may have this completely backwards, and please educate me if I do ... but wouldn't you want to buy futures at a low price immediately after the event if you think the price is going up later due to an upcoming scarcity? If so, then I think you and Walt are in agreement as to where the risk lies geographically.

As to what I would do financially -- I'm with those who will stay the course in the near term because I don't know what else to do. I expect our expenses would change as we probably wouldn't travel as much, though maybe food and healthcare would cost more. Maybe property values would decline on the coasts and increase in the middle of the continent, so there could be investment opportunities to watch for in real estate.

 

[RunningBum]

9/11 would be the most similar event in recent history. I stayed the course through that. I think this would be a lot worse, but assuming we had no warning, I assume it's the immediate impact that would be dramatic, and I would not want to cash out on a low.

How did the market do during the Cuban missile crisis?

 

[Nightcap]

Don't just do something, stand there!

I can't see myself doing anything at all. By the time I get to act, it'll be too late, and I'd be selling at a loss. Better to just let it ride. Besides, my portfolio would be a secondary consideration at best.

 

[cooch96]

For the purposes of this exercise, I figure limited means I'm not directly affected. I don't need to worry about immediate survival. I go to work the next day; I keep on keepin on.

I think a limited event would have as much impact as a grievous natural disaster. That Indian Ocean tsunami from about 12 years ago comes to mind. I don't recall the global market reaction to that, but it wouldn't be difficult to research.

I expect rebalancing more often than annually could prove prudent. Perhaps as frequently as every other week, depending on your investments.

Um, yeah. That's my plan, in a nutshell.

 

[Spock]

The only way this stays limited is if the country that got hit (US) did not respond in kind. So deducing/wild a$$ guessing a scenario from that given current events there are 2 scenarios:
1. Part of the the US west coast, Alaska, Hawaii, or a place like Guam is now a wasteland... With enormous restraint this will at best trigger a massive conventional response.
2. Since the talking heads say the likely instigator can launch but does not have re-entry survivable warheads, the EMP attack scenario fits within their capabilities. So the Western power grid gets fried... thats everything west of ND, SD, NE, OK, and TX.
Even if nothing is hit, the emotional panic will strip store shelves and keep people home, shutting down the economy for awhile.
Either way the best investment for at least 6 months after the event would be the prepper list: guns/gold/food/water, etc. (my main assumption is the markets will be closed for "a while"... so no stock/bond trading will occur until things stabilize).
The wild cards are the central banks printing money and buying assets when the lights come back on.

 

[6miths]

Likely would be a very asymmetrical exchange. If it is a situation that it isn't then it isn't going to matter much what one does. In the case of the former, just going to carry on.

 

[MRG]

One thing to always remember. Most of what we are discussing is disaster recovery. Plain and simple, not a corporate DR position, your personal DR. We all have plans; formal or not.

For many disasters there's basic things we all need. An attack of this nature sould cause us to: Use our existing personal DR plan, plus any considerations for this type of disaster(to become an appendix in our existing DR plan).

Sincerely hope it's never used.

 

[Senator]

Senator, If Im able to flee, Ill rent one of your places for cash or gold, ok? I have a dog is that cool?

No problem. And the dog will come in handy if food shortages occur.

 

[ejman]

There have been only two instances of really small (by current standards) nuclear warheads being used. Considering how effective those two were where they were deployed I would think that all of the prepping would be for naught if one happens to be in one of the targeted areas. Outside those areas, I think that having lots of cash and general survival prepping are the only reasonable precautions one may take on short notice. As to the portfolio? who knows. If records are destroyed at the primary and secondary storage locations I suspect one would be SOL for a long time, maybe for the duration.

 

[Fermion]

Whew, back online. Ok, here is what happened. I start this thread and then an hour or so later my cell phone connection dies. I check it and there is zero signal..none. Not even -130dbm. I think that is strange. I then drive from our mountain property toward town. No signal. I have to pull over for some fire trucks.

I get into town and things seem normal-ish. I drive to the AT&T store and notice all the employees sitting outside. They said all towers and internet are down, Verizon, AT&T, Sprint.

I am currently outside the closed local library which does have internet. Nothing in the news about this outage, not even a forest fire (which is really what I was thinking since it has been so dry and smoke is everywhere). Did it cross my mind about what we are talking about. I have to reluctantly say yes. I have never seen zero signal before...always some sort of signal when you go into SIM status under About Phone.

So carry on. Fermion is just alone and offline here in the mountains until someone fixes all the cell towers on various mountains which all went down at once.

 

[Blue Collar Guy]

Whew, back online. Ok, here is what happened. I start this thread and then an hour or so later my cell phone connection dies. I check it and there is zero signal..none. Not even -130dbm. I think that is strange. I then drive from our mountain property toward town. No signal. I have to pull over for some fire trucks.

I get into town and things seem normal-ish. I drive to the AT&T store and notice all the employees sitting outside. They said all towers and internet are down, Verizon, AT&T, Sprint.

I am currently outside the closed local library which does have internet. Nothing in the news about this outage, not even a forest fire (which is really what I was thinking since it has been so dry and smoke is everywhere). Did it cross my mind about what we are talking about. I have to reluctantly say yes. I have never seen zero signal before...always some sort of signal when you go into SIM status under About Phone.

So carry on. Fermion is just alone and offline here in the mountains until someone fixes all the cell towers on various mountains which all went down at once.

I was wondering what happened to you

 

[Popeye]

Makes me think that an event like this may also include a massive cyber attack on infrastructure hitting most all of us. Now im getting depressed!

 

[Blue Collar Guy]

Makes me think that an event like this may also include a massive cyber attack on infrastructure hitting most all of us. Now im getting depressed!

I hope card services gets zapped first. I get a call every morning from them.

 

[Jerry1]

Between hurricanes and the current geopolitical situation, I can't help but feel like I should move to all fixed investments and get out of the market. Of course, every other time I felt this way, I did alright by getting out but failed to get back in soon enough to capitalize. Heeding the advice of this board, I have a very conservative AA but I'm comfortable with it and I'm doing everything I can to convince myself to stay the course. I am with a number of people that say once the damage is done, not much you can do and selling at that point is not a good strategy.

Based on my nervousness, I am going to do some basic things like get some cash in the house, keep the cars better filled up, increase the food and water stock piles and get more current in my physical printing of my financial statements. Nothing drastic, but realizing that stuff happens and to be a little better prepared. If prepper is a 10 on a 1-10 scale, I'm probably at a 3 and should probably move up to a 5.

 

[Blue Collar Guy]

Based on my nervousness, I am going to do some basic things like get some cash in the house, keep the cars better filled up, increase the food and water stock piles and get more current in my physical printing of my financial statements. Nothing drastic, but realizing that stuff happens and to be a little better prepared. If prepper is a 10 on a 1-10 scale, I'm probably at a 3 and should probably move up to a 5.

I think all these things are great. Nothing over the top, just good self preservation / For the water I buy Poland spring .5L bottles and rotate the stock , esp when they are on sale. For the food I got a free sample from a place called Wise. It was edible, we ordered one of their packages. They have a ton of different offerings. I always have cash on hand. You can accomplish all of the above in less than a week. Hopefully we all do this for an event that will not happen.

 

[frayne]

Stay the course, what other option is there really ?

 

[Another Reader]

If you look at the history of people that hate each other and have nukes, they have all acted fairly rationally. The fellow that is acquiring them now may not be rational. If he lobs one at Japan, his long time enemy, we will deal with nuclear fallout and the world as a whole would likely have to deal with him. Markets would be in turmoil until things settled down. If he waits until his engineers can build a working ICBM, he could lob one this way. The disruption would be severe and long term.

Might be thinking about moving east of the Rockies if it starts looking like he will do that. All that California real estate will not be nearly as attractive as it is now.

At my age, the radiation induced cancers won't be that much of a factor if the exposure is minimal. For younger people, mild to moderate exposure will likely decrease their lifespans.

 

[MRG]

Makes me think that an event like this may also include a massive cyber attack on infrastructure hitting most all of us. Now im getting depressed!

Doesn't matter if it's a cyber attack. If you take out enough infrastructure it's the same. Yeah folks have backup generators and back up phone lines. What if, the switches and larger datacenters no longer exist, along with power? What happens when you run out of fuel for the generators?

Quite a few unknowns. I don't know how to control any of them. Maybe I'll take a nap.

 

[clifp]

Interesting question.

I've actually played around with looking at 100 kiloton strikes on Oahu

Assuming they weren't in the US. I'm afraid I'd join the crowd and stock up on guns, ammo, and MREs.

Financially, I'd shift some assets to both New Zealand and Switzerland. I'd be tempted to get $20,000- $50,000 in cash. I've thought about gold but I'm still not convinced it is the currency for future crisises.

 

[samclem]

In the event of a limited nuclear exchange somewhere in the world and the prospect of a large disruption in trade relations, what would you do as it related to your personal finances and retirement portfolio?

I don't think that there's much I would do, or could do, regarding our finances after a limited nuclear exchange. Even if the US is not involved directly, I would think markets would be closed almost immediately and that getting a trade order, or even a wad of greenbacks from the ATM, might take a long time. And, even if I could place a trade, I don't think I'd be any better at outguessing the market in such a situation as I have been in the past. So, I'd hold tight. I'd be darn happy if I had some cash (in case things are "temporarily chaotic" rather than "entirely broken") and especially some things needed to see us through >in case< things got crazy.

Freedom of action to buy things now that will have much greater utility in the event of such a disruption--these opportunities exist today, and will largely be gone if hostilities begin. In regards to the thread topic, taking the steps now to assure the basic needs of my family can be met during a time of turmoil and disruption seems more productive than steps taken after the fact.

On a side note: There's considerable debate about the impact that an electromagnetic pulse (EMP) from a single high-altitude nuclear explosion might have on the US. For those interested in what the EMP Commission empaneled by Congress had to say, the exec summary is here. The report is controversial.