Investment firm estimates 10% chance of ‘civilization-ending’ nuclear war but says to buy stocks

AAn investment research firm warns that even though there is a 1 in 10 chance that Russia’s invasion of Ukraine will end in a nuclear disaster, investors should still be prepared to beef up their portfolios.

BCA Canadian Research Publication a note which assessed the growing risk of nuclear war and found that even though there is an “uncomfortably high” 10% probability of “civilization ending nuclear war”, investors should remain optimistic. Analysts, led by chief global strategist Peter Berezin, were keen to point out that despite the dire estimate, there is a “huge” margin for error.

“Yes [Vladimir] Putin concludes he has no future, the risk is that he decides no one else should have a future either,” reads an executive summary.

The researchers added that even if World War III is averted, global markets could be rocked by the collective panic of the situation in the coming weeks, which could lead to a similar scenario at the start of the coronavirus pandemic. Early in the pandemic, stocks crashed and often swung wildly, although markets rebounded a few months later and trended higher until Russia invaded Ukraine.


The BCA Research note argued that investors should ignore the threat of nuclear annihilation when considering their exposure to the markets, because if this worst-case scenario were to occur, stock losses would have no impact anyway. importance.

“Despite the risk of nuclear war, it makes sense to remain constructive on stocks over the next 12 months. If an ICBM is heading your way, the size and composition of your portfolio becomes irrelevant,” they wrote. “So from a purely financial standpoint, you should largely ignore existential risk, even if you care a lot about it from a personal standpoint.”

“Conclusion: the risk of Armageddon has increased dramatically. Remain bullish on equities over a 12-month horizon,” the report adds.

Berezin clarified for eFinancialCareers that he was not suggesting in the research note that stocks would increase if there was some form of nuclear war. Rather, he suggested that, nuclear war aside, the situation in Ukraine would cause stocks to fall, but eventually they would recover.

He said that since it is impossible to financially prepare for a nuclear war scenario, investors should only look to the 90% scenario that markets will fall before recouping those losses at some point. in the future.

“A moment of panic is coming which will present a good buying opportunity for investors,” he explained.

Global markets have been in disarray since war broke out in Ukraine. On Monday afternoon, the Dow Jones Industrial Average contracted about 1.7%, or about 575 points, while the Nasdaq fell 2.4% and the S&P 500 fell 2%.

Meanwhile, gold has climbed to around $2,000 an ounce as investors flock to the safe-haven asset. Gold was trading at around $1,795 at the start of the month, which represents an increase of 11.4%.

The Bulletin of Atomic Scientists announced on Monday that the so-called Doomsday Clock will remain at 100 seconds to midnight despite the war in Europe.

The group explained that although they did not choose to move the clock hand forward, midnight being a metaphor for the end of the world, the world situation remains the worst it has been since the clock was first set in 1947.


“For many years, we and others have warned that the most likely way to use nuclear weapons is in an unwanted or unintended escalation of conventional conflict,” the group said in a statement. “Russia’s invasion of Ukraine brought this nightmare scenario to life, with Russian President Vladimir Putin threatening to raise nuclear alert levels and even use nuclear weapons for the first time if NATO steps in to help Ukraine.

“This is what 100 seconds to midnight looks like,” the band added.