With the 2003 Second Gulf War so long ago, many investors have no experience of what a major war means for their portfolio. The civil wars in Iraq, Syria and Yemen have been comparative sideshows in terms of their economic impact outside those countries.
Of course nobody but a madman would actually want any sort of war, with its horrific consequences for those fighting and living under it. But as history shows, that has never stopped them happening in the past.
I remember being at a press conference in Dubai just before the start of the Second Gulf War in March 2003. Somebody came running up to me with spreadsheets and graphs in his hands to explain that now was the point of maximum uncertainty - just before the shooting started - and that this was the very lowest point to buy global stocks.
At the time I was a bit shocked that anyone could take such a cool view of an approaching disaster. Yet this particular contrarian investor had certainly got his timing right.
Right now in North Korea the drums of war are beating again. But nobody really believes anything will happen because it is almost 70 years since the First Korean War, and in all that time belligerent talk and weapons testing has not resulted in war.
However, with US President Donald Trump hinting that his current consultations with US military could be ‘the calm before the storm’ and ‘nothing else will works’ - that could change quite suddenly.
If war was to commence, it would be a dramatic and extremely violent affair. It would also upset the current complacency in extremely overvalued US and other global stock markets, with seriously negative consequences.
After the very quick and at first successful invasion of Iraq by the US and its allies the stock market went up. But it had reached rock bottom first. History could repeat itself again.
For what financial markets hate more than anything is uncertainty, and nothing is more uncertain than a war. It could turn out to be a pushover like Iraq - which later morphed into a disaster - or nuclear bombs might land on South Korea causing immense loss of life.
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Read more from Peter Cooper:
The best contrarian investment opportunities this Autumn
Will gold shine brightly again this autumn as bitcoin crashes?
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Pricing of worst possible scenarios into stock markets is always a painful experience for those fully invested at the time, and the subsequent recovery can take many years, particularly when stock prices have reached record-breaking levels as they have today.
Conversely wars tend be very positive for commodity prices and interest rates.
Financial markets are then thinking further ahead and asking well what if this proves to be a longer commitment than originally advertised. The First World War was supposed to be over by Christmas but took four years to reach an inconclusive conclusion.
Therefore, markets assume that commodities ought to cost more because military equipment lost will need to be replaced. Also there is an assumption that inflation will follow the necessary printing of money to pay for the conflict.
So the Middle East sat on the world’s largest energy reserves would be a net beneficiary. Also on some calculations, more than one-third of the world’s energy supply flows would be disrupted by a conflict in Asia, and that alone would mean far higher oil and gas prices.
Opportunistic investors might care to buy up oil shares, for example, in the stock market mayhem that would result from a surprise conflict in North Korea or the build up to one.
One of my contrarian investment friends was thinking about South Korean shares as a clear buy in such a tragedy a couple of months back. Professional investors already have this situation on their radar but, like everybody else, have been loathed to jump the gun.
Classic safe havens like precious metals also move up and down in price on every news item about North Korea. Gold and silver would benefit due to fears about future inflation from money printing as well as a flight from riskier assets like overvalued stock markets and bonds.
If a North Korean war was to get completely out of hand, then gold could hit record highs as central banks would then have so many problems to deal with that fixing the gold price would be put on the backburner as it was in 2009 to 2011.
Rising interest rates from falling bond markets would put a big squeeze on all asset prices related to cheap money. Holding cash would be a better place to be, at least until the initial bear market was completed.
Real estate is a more difficult asset to call, however. It also has a safe haven appeal and in a time of chaos in stock markets, real estate can benefit as a less risky alternative.
A bad crash in the Dubai Financial Market in the mid-2000s did nothing to derail the then property boom, for instance, and in fact powered it to new highs just in time for the Global Financial Crash of 2008.
So while war is the worst of manmade tragedies it can be a friend to the opportunistic investor if you move correctly when it happens.
Sir John Templeton, one of the world’s most famous investors, made his first fortune by borrowing big to invest in undervalued US companies in the early days of the Second World War when the effect the war was to have on profits was not generally appreciated.
Unfortunately, today US stocks are very overvalued so it is impossible to make the same argument, and selling short is a more obvious course of action.
Buying precious metals now while prices are cheap is a far better analogy. Right now people prefer to gamble on bitcoin going up and Facebook shares rather than buy gold, and the contrarian in me reckons the consensus is wrong as usual.
Peter Cooper has been writing about finance in the Gulf for over 20 years
If you go
Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.
The five pillars of Islam
Disclaimer
Director: Alfonso Cuaron
Stars: Cate Blanchett, Kevin Kline, Lesley Manville
Rating: 4/5
HAJJAN
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How to protect yourself when air quality drops
Install an air filter in your home.
Close your windows and turn on the AC.
Shower or bath after being outside.
Wear a face mask.
Stay indoors when conditions are particularly poor.
If driving, turn your engine off when stationary.
Electoral College Victory
Trump has so far secured 295 Electoral College votes, according to the Associated Press, exceeding the 270 needed to win. Only Nevada and Arizona remain to be called, and both swing states are leaning Republican. Trump swept all five remaining swing states, North Carolina, Georgia, Pennsylvania, Michigan and Wisconsin, sealing his path to victory and giving him a strong mandate.
Popular Vote Tally
The count is ongoing, but Trump currently leads with nearly 51 per cent of the popular vote to Harris’s 47.6 per cent. Trump has over 72.2 million votes, while Harris trails with approximately 67.4 million.
Company%20Profile
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COMPANY PROFILE
Name: HyperSpace
Started: 2020
Founders: Alexander Heller, Rama Allen and Desi Gonzalez
Based: Dubai, UAE
Sector: Entertainment
Number of staff: 210
Investment raised: $75 million from investors including Galaxy Interactive, Riyadh Season, Sega Ventures and Apis Venture Partners
From Zero
Artist: Linkin Park
Label: Warner Records
Number of tracks: 11
Rating: 4/5
Kanguva
Director: Siva
Stars: Suriya, Bobby Deol, Disha Patani, Yogi Babu, Redin Kingsley
COMPANY PROFILE
Name: Almnssa
Started: August 2020
Founder: Areej Selmi
Based: Gaza
Sectors: Internet, e-commerce
Investments: Grants/private funding
Wicked
Director: Jon M Chu
Stars: Cynthia Erivo, Ariana Grande, Jonathan Bailey
Cricket World Cup League 2
UAE squad
Rahul Chopra (captain), Aayan Afzal Khan, Ali Naseer, Aryansh Sharma, Basil Hameed, Dhruv Parashar, Junaid Siddique, Muhammad Farooq, Muhammad Jawadullah, Muhammad Waseem, Omid Rahman, Rahul Bhatia, Tanish Suri, Vishnu Sukumaran, Vriitya Aravind
Fixtures
Friday, November 1 – Oman v UAE
Sunday, November 3 – UAE v Netherlands
Thursday, November 7 – UAE v Oman
Saturday, November 9 – Netherlands v UAE
DMZ facts
- The DMZ was created as a buffer after the 1950-53 Korean War.
- It runs 248 kilometers across the Korean Peninsula and is 4km wide.
- The zone is jointly overseen by the US-led United Nations Command and North Korea.
- It is littered with an estimated 2 million mines, tank traps, razor wire fences and guard posts.
- Donald Trump and Kim Jong-Un met at a building in Panmunjom, where an armistice was signed to stop the Korean War.
- Panmunjom is 52km north of the Korean capital Seoul and 147km south of Pyongyang, North Korea’s capital.
- Former US president Bill Clinton visited Panmunjom in 1993, while Ronald Reagan visited the DMZ in 1983, George W. Bush in 2002 and Barack Obama visited a nearby military camp in 2012.
- Mr Trump planned to visit in November 2017, but heavy fog that prevented his helicopter from landing.
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
Company%20Profile
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The specs
Engine: 77.4kW all-wheel-drive dual motor
Power: 320bhp
Torque: 605Nm
Transmission: Single-speed automatic
Price: From Dh219,000
On sale: Now
WITHIN%20SAND
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'Shakuntala Devi'
Starring: Vidya Balan, Sanya Malhotra
Director: Anu Menon
Rating: Three out of five stars
Know your cyber adversaries
Cryptojacking: Compromises a device or network to mine cryptocurrencies without an organisation's knowledge.
Distributed denial-of-service: Floods systems, servers or networks with information, effectively blocking them.
Man-in-the-middle attack: Intercepts two-way communication to obtain information, spy on participants or alter the outcome.
Malware: Installs itself in a network when a user clicks on a compromised link or email attachment.
Phishing: Aims to secure personal information, such as passwords and credit card numbers.
Ransomware: Encrypts user data, denying access and demands a payment to decrypt it.
Spyware: Collects information without the user's knowledge, which is then passed on to bad actors.
Trojans: Create a backdoor into systems, which becomes a point of entry for an attack.
Viruses: Infect applications in a system and replicate themselves as they go, just like their biological counterparts.
Worms: Send copies of themselves to other users or contacts. They don't attack the system, but they overload it.
Zero-day exploit: Exploits a vulnerability in software before a fix is found.
More from Neighbourhood Watch
Singham Again
Director: Rohit Shetty
Stars: Ajay Devgn, Kareena Kapoor Khan, Ranveer Singh, Akshay Kumar, Tiger Shroff, Deepika Padukone
Rating: 3/5
The specs
Engine: Direct injection 4-cylinder 1.4-litre
Power: 150hp
Torque: 250Nm
Price: From Dh139,000
On sale: Now
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How to help
Donate towards food and a flight by transferring money to this registered charity's account.
Account name: Dar Al Ber Society
Account Number: 11 530 734
IBAN: AE 9805 000 000 000 11 530 734
Bank Name: Abu Dhabi Islamic Bank
To ensure that your contribution reaches these people, please send the copy of deposit/transfer receipt to: juhi.khan@daralber.ae
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Company%20Profile
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COMPANY%20PROFILE
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COMPANY PROFILE
Founders: Alhaan Ahmed, Alyina Ahmed and Maximo Tettamanzi
Total funding: Self funded
Keep it fun and engaging
Stuart Ritchie, director of wealth advice at AES International, says children cannot learn something overnight, so it helps to have a fun routine that keeps them engaged and interested.
“I explain to my daughter that the money I draw from an ATM or the money on my bank card doesn’t just magically appear – it’s money I have earned from my job. I show her how this works by giving her little chores around the house so she can earn pocket money,” says Mr Ritchie.
His daughter is allowed to spend half of her pocket money, while the other half goes into a bank account. When this money hits a certain milestone, Mr Ritchie rewards his daughter with a small lump sum.
He also recommends books that teach the importance of money management for children, such as The Squirrel Manifesto by Ric Edelman and Jean Edelman.
COMPANY PROFILE
Name: Qyubic
Started: October 2023
Founder: Namrata Raina
Based: Dubai
Sector: E-commerce
Current number of staff: 10
Investment stage: Pre-seed
Initial investment: Undisclosed
US tops drug cost charts
The study of 13 essential drugs showed costs in the United States were about 300 per cent higher than the global average, followed by Germany at 126 per cent and 122 per cent in the UAE.
Thailand, Kenya and Malaysia were rated as nations with the lowest costs, about 90 per cent cheaper.
In the case of insulin, diabetic patients in the US paid five and a half times the global average, while in the UAE the costs are about 50 per cent higher than the median price of branded and generic drugs.
Some of the costliest drugs worldwide include Lipitor for high cholesterol.
The study’s price index placed the US at an exorbitant 2,170 per cent higher for Lipitor than the average global price and the UAE at the eighth spot globally with costs 252 per cent higher.
High blood pressure medication Zestril was also more than 2,680 per cent higher in the US and the UAE price was 187 per cent higher than the global price.
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