Andrew Lockley – Exponential Investor (United Kingdom) –
Today, we’re taking a short detour from our usual content. We’re looking ahead to the long-term crises and opportunities that can affect your portfolio.
This is just the kind of thing you’ll find at Cycles Trends and Forecasts – our publication for the far-sighted financial investor. You can read their “cheat sheet” of predictions for coming decades – and, right now, it’s completely free of charge.
I always think investors need to prepare for doom and gloom. That way, you’ll be ready for any crises that come. Maybe I spent too much time reading post-apocalyptic fiction, as a child (the hopeless, bleak Brother in the Land was one of my favourites). But, despite my seemingly-gloomy outlook, history seems to bear out the worst of my fears. All over the world, you can see evidence of civilisations that did not make it. From the lofty heights of Machu Picchu, to the low-lying Temples of Angkor Wat, the world is littered with ruined monuments, temples, and amphitheatres – all signs of civilizations long-gone.
Today, we like to think we’re different; we like to think we’re smart. But I bet all the other civilisations thought they were different, too. There’s even a word for that: exceptionalism.
Civilisation today may be larger, and more interconnected, than ever before in history. But that does not mean it’s immune to existential threats. In fact, many such threats are new – directly resulting from our status as an advanced technological society. Nuclear weapons are one obvious example.
And, just as history informs us of our vulnerability, so might astronomy.
It seems paradoxical that we have not seen any evidence of civilisation among the myriad stars that make up our galaxy. This is not just any old puzzle, it’s a well-studied paradox: Fermi’s Paradox. It’s colloquially summed up by Fermi’s quotation: “Where is everybody?”
One possible explanation is worryingly simple: countless civilizations have emerged —only to collapse back into obscurity, or annihilation.
These two strands of evidence suggest that our future is far from guaranteed. Our actions in the next few decades may dictate our ability to survive as a technological civilization – and maybe even as a species.
Today, will be taking a look at some of the most important existential threats that mankind faces. Ever commercially-minded, we’ll be focusing on companies that are helping to reduce these risks.
Your investment might not only be profitable – it might also save the world!
The risk of nuclear war may be obvious – but it remains very real. Notwithstanding recent tensions over North Korea, we’ve been very lucky. Indeed, we’ve seen a remarkable nuclear abstinence, since the use of atomic bombs over Japan ended World War II.
It would be nice to think that situation will continue, but there are reasons to believe that it will not. A belligerent and expansive USSR has been replaced by a belligerent and expansionist Russia – now headed by a despot. The White House is currently occupied by an impulsive, irrational, demagogue – with dictatorial tendencies. China is threatened by new American rhetoric, and is investing heavily in its military. Around the world, old enemies are becoming nuclear-armed: Israel/Iran, and India/Pakistan being notable examples of potential nuclear tension, in coming years. A cluster of less belligerent states, such as South Korea and Taiwan, may yet acquire nuclear weapons – due to troublesome neighbours and historic enmities.
Paradoxically, the best way to profit from nuclear weapons may be by investing in the companies that make, deliver and support them. The threat of nuclear annihilation has seemingly been kept at bay by the principle of “mutually assured destruction”. Any nuclear war will be devastating to both sides in a conflict – so neither side can justify first use of nuclear weapons. Coupled with this, no non-nuclear state dares to pose an existential threat to a nuclear state. This principle of deterrence has lasted— so far. By investing further in nuclear arms, it’s possible that nuclear war may be staved off.
Companies to watch: Honeywell, BAE Systems, Lockheed Martin, Northrop Grumman
We are used to the risk of major global diseases. In our lifetimes, we’ve seen Ebola, Bird Flu, SARS – and a range of others. Fortunately, none of these have turned into an apocalyptic outbreak. Even in relatively recent history, that’s not been the case. The Spanish flu outbreak of 1918 killed more people than the Great War.
Further back in history, the Black Death was an example of a truly devastating outbreak. Several waves engulfed Europe – but the most severe (in 1349) killed around a third of the English population. Should that death toll be repeated, it’s touch-and-go whether civilization as we know it would persist.
When it comes to investment opportunities, the obvious beneficiaries are biotech companies. These will be our first line of defence against a pandemic. Currently, we’ve set aside little vaccine production capacity for such use. This societal oversight is finally now being addressed on a relatively significant scale.
It’s not just natural disease, which we need to worry about. One possible route to a global apocalypse is a synthetic organism – or one that has been genetically modified. Benign experimentation, or negligent bioengineering, could create a newly-threatening pathogen.
Furthermore, it’s not only human pandemics you need to watch out for. Crops are every bit as vulnerable. If you’re seeking a poster child for agricultural vulnerability, the banana’s lack of genetic diversity places it at particularly serious risk.
Companies to watch: Pfizer is just one of many firms involved in the Coalition for Epidemic Preparedness Innovations. Don’t forget to watch out for firms operating in plant disease, too.
Armageddon may have brought asteroid risk into the popular consciousness – but it’s not just sci-fi. The threat of an asteroid impact is very real. Many of Earth’s mass extinctions have originated from what’s technically known as “bolide impacts”. There have also been many smaller events, a recurrence of which could have a very severe impact on human society. For example, 1908’s Tunguska strike was around half the size of the world’s largest nuclear bomb, and it flattened 2,000 square km of forest.
Companies to watch: Asteroid-mining firms, such as Planetary Resources, and Deep Space Industries would be obvious technology partners. Space majors, such as SpaceX and Boeing, would also be well-placed to benefit from a crisis.
We’ll continue this cheery stuff, tomorrow. Meanwhile, email us your nightmares: email@example.com
While you’re waiting, don’t forget to read up on the killer predictions from Cycles Trends and Forecasts.