Hypothetical limited nuclear exchange

[Fermion]

This is a topic which is possibly in the back of everyone's mind but can devolve into bickering and arguments if politics are brought into the discussion. I have asked the moderators if I could present it for discussion and we agreed to try and keep things neutral, hypothetical and non-specific. We agree the topic will get locked or deleted if things go off kilter.

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 know the initial reaction is to not think too much about this, but I would rather have at least an outline of a plan of action, even if that plan is just to stay the course and maintain current stock/bond/cash allocations.

There probably are not too many of us around who were invested during WWII, much less early retired during that time (imoldernu maybe?) so our collective real world experience with vast disruptions in trade and travel may be limited.

 

[Nemo2]

Initial reaction....worldwide panic. Sell everything the day before the attack and buy it all back at bargain prices when the exchanges eventually reopen.

 

[Blue Collar Guy]

John Bogle (my investment hero), always says short of some geo-political disaster stay the course. I have some gold, so if hyper inflation hits I MIGHT be ok for a while. Ill stay the course. Im in NYC so Ill probably be dead with the first strike, and I wont have to worry for long. Thanks for the uplifting thread. Scream therapy is rapidly approaching.

 

[Senator]

It will never happen unless one lands on our shores.

 

[SecondCor521]

^ I doubt we would know which day would be the day before the attack. Could be today.

Personally I would stay the course. I would probably check my AA and move from bonds to stocks if events caused my portfolio to become out of whack.

If it's the limited nuclear exchange I am thinking is most likely currently, I personally don't see it as adversely effecting the economy since there is not that much trade between the two countries as far as I know. So I would view any drop in the market as a buying opportunity.

 

[Blue Collar Guy]

It will never happen unless one lands on our shores.

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

 

[Fermion]

Initial reaction....worldwide panic. Sell everything the day before the attack and buy it all back at bargain prices when the exchanges eventually reopen.

In this hypothetical world, there are no do-overs or crystal balls.


You would be presented with whatever the market allows you to buy or sell for Monday morning (assuming the event happened over the weekend and assuming the markets even opened for regular trading).

 

[Just_Steve]

Since all of mine are in tax deferred accounts if able I would shift into the stable value funds then see how far the market drops then buy, buy, buy.

 

[Fermion]

Some break from levity is appreciated but for the most part I am interested to know what people think they REALLY would do in such an event.

Right now I am not sure what I would do. I am well prepared to stay the course through a 2009 style market drop but I do not know what I would do if we became a more isolated. I don't specifically have emerging markets or international ETFs in our portfolio (much to my sadness considering the YTD gains you guys have had).

 

[GrayHare]

Economically speasking, a limited event seems little different than wars that have occurred during the past few decades, so I would not make significant investment moves. A large scale event can render moves moot.

 

[W2R]

This is a topic which is possibly in the back of everyone's mind but can devolve into bickering and arguments if politics are brought into the discussion. I have asked the moderators if I could present it for discussion and we agreed to try and keep things neutral, hypothetical and non-specific. We agree the topic will get locked or deleted if things go off kilter.

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 know the initial reaction is to not think too much about this, but I would rather have at least an outline of a plan of action, even if that plan is just to stay the course and maintain current stock/bond/cash allocations.

There probably are not too many of us around who were invested during WWII, much less early retired during that time (imoldernu maybe?) so our collective real world experience with vast disruptions in trade and travel may be limited.

Very interesting topic.

Personally I would probably do nothing and "stay the course". This would not be the result of some sort of vast wisdom, so much as being the result of not having a clue about what to do.

 

[Blue Collar Guy]

Some break from levity is appreciated but for the most part I am interested to know what people think they REALLY would do in such an event.

Right now I am not sure what I would do. I am well prepared to stay the course through a 2009 style market drop but I do not know what I would do if we became a more isolated. I don't specifically have emerging markets or international ETFs in our portfolio (much to my sadness considering the YTD gains you guys have had).

Do you rely on this money to eat? Is the house paid off? This is why I paid off my house, I sleep better at night. I could have made way more in the market but a paid off home is a security blanket for me. How panicky were you in February 2009? I was numb, but invested anyway. Maybe next time It goes to zero IDK. Dont worry about the YTD on the EM, They are still a laggard compared to my other equities for the last 10 years.

 

[W2R]

One idea that comes to mind, is to move some of the cash part of my asset allocation, from Vanguard to greenbacks in my pocket. Maybe enough to last me until the end of 2018.

Then, if the internet went down for war related reasons, I would still have money to live on for a while.

 

[Walt34]

Personally I would probably do nothing and "stay the course". This would not be the result of some sort of vast wisdom, so much as being the result of not having a clue about what to do.

About the same here, and for the same reason.

Except maybe buy futures in almonds, lettuce, and other crops grown mostly in California.

 

[GalaxyBoy]

Awww, I was hoping Al was writing another book.

I'm reminded of an old ad by one of the homebrew beer supply companies. "In case of nuclear attack you'll be a lot more popular than the guy down the street who collects sramps."

 

[Blue Collar Guy]

.

Whats your AA? Specifically the cash portion, precious metals(physical).? If you currently have excess and are the typical FIRE'd member that most probably are leaving millions to heirs ,I would get money in the house safe and get some silver coins. All that getting free miles and credit card points wont feed you. I can not imagine the run on the supermarkets that would happen here. They predict 2 inches of snow and I cant even buy a dented can of spaghettiO's. Id probably starve after 2 weeks.

 

[Just_Steve]

About the same here, and for the same reason.

Except maybe buy futures in almonds, lettuce, and other crops grown mostly in California.

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

 

[Nemo2]

^ I doubt we would know which day would be the day before the attack. Could be today.

You caught that huh?

 

[W2R]

Please try to remember Fermion's request to "keep things neutral, hypothetical and non-specific" (in other words, a hypothetical, non-specific war that we can discuss neutrally without politics). The objective is to keep this fascinating thread from devolving into political wrangling so that it can remain open.

 

[Nemo2]

One idea that comes to mind, is to move some of the cash part of my asset allocation, from Vanguard to greenbacks in my pocket. Maybe enough to last me until the end of 2018.

Then, if the internet went down for war related reasons, I would still have money to live on for a while.

Buy Zimbabwean dollars and Weimar Republic marks........hyperinflation would likely be rampant and the dollars you withdrew might not last a week.

 

[W2R]

Buy Zimbabwean dollars and Weimar Republic marks........hyperinflation would likely be rampant and the dollars you withdrew might not last a week.

Maybe I could buy canned goods with it, and consider them to be a cash equivalent. At least I could eat the canned goods. Currency doesn't taste too good.

I am just remembering Katrina, which was a short term calamity. For a while, we really couldn't use credit cards at most places, I suppose because of electrical or internet problems. Cash was King.

 

[Alan]

I think I would stay the course and do nothing other than continuing the Roth conversions.

This last year I've withdrawn ~$500k to buy a house, car and other expenses in the move to England. Half of this came from selling off all our Ibonds, the rest from equities. We have no need for future withdrawals other than dividends to supplement our pensions.

 

[Koogie]

Perhaps I am cynical but I would suggest any nuclear exchange might rapidly move beyond being limited.

My business partner is a "prepper" I always joke with him that I am glad he is hoarding cans of tuna, guns, ammo.., etc.. because I know exactly where I have to go to get them when the faeces hits the flywheel.

 

[Blue Collar Guy]

Maybe I could buy canned goods with it, and consider them to be a cash equivalent. At least I could eat the canned goods. Currency doesn't taste too good.

I am just remembering Katrina, which was a short term calamity. For a while, we really couldn't use credit cards at most places, I suppose because of electrical or internet problems. Cash was King.

We had just moved here Hurricane Sandy hit, our neighbor was going to rescue his elderly parents in a Brooklyn neighborhood that was under water(Gerritsen Beach). You needed cash. Plastic was worthless. I had cash. I lent him a stack

 

[GrayHare]

Outside a disaster area the payment systems generally work as before. Tough to know if one will be in a disaster area. Even those responsible for a man-made disaster may not have accurate enough control to know where that will be.