Stocks, Bonds, and War

Wars and financial markets have coexisted, and often been intertwined, for hundreds of years. Countries that have lost major wars have had their financial markets decimated, while global markets have been relatively resilient, even to major conflicts. Despite the relative resilience of global markets, crises and wars tend to reduce global market returns and increase their volatility.
Special Rational Reminder episode: rationalremind...
Referenced in this video:
War, Peace and Stock Markets: papers.ssrn.co...
ICB Project: sites.duke.edu...
WHY DOES STOCK MARKET VOLATILITY CHANGE OVER TIME?: www.nber.org/s...
Earning from History? Financial Markets and the Approach of World Wars: www.brookings....
The General Theory of Employment: macroeconomiau...
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[@robertwright8844]

10:20 I think he meant *decreased* recovery times. Taking longer to recover losses would not be a benefit. Or, did he mean that recoveries (as in periods of positive returns) tend to be more prolonged for diversified portfolios?

[@BenFelixCSI]

No you are correct. I meant to say decreased. Thanks for paying attention!

[@NiagaraWeddingVideographer]

@@BenFelixCSI you can do some simple post edits in KZbin’s editor if you want to!

[@BenFelixCSI]

I did not realize I could edit a video once it’s live.

[@aaronlojewski6819]

@@BenFelixCSI HA! I should read the comments before making my own. Well done.

[@nhutnguyen5089]

I think he meant accelerate or improve

[@userno008]

When the world needed him most... he came back

[@martinheusel9417]

@@joachimmilberg2313 I lost £1200 carelessly trading on a platform,then I was referred to Juan Antonio Landa. she recovered the loss and made an extra profit of £4600.

[@jonathanwalker4619]

A lot of positive comments about Juan Antonio Landa, I thought I was the only one benefiting from her. My first returns with Juan Antonio Landa gave me a profit of over £8500

[@kaiaschwartz2428]

Wow I can brag about Juan Antonio,she has managed my account in such a way winning is the only standard I know.

[@LovesGrilling]

He is... The Dark Knight.

[@oioidarling9404]

Once again giving us that much-needed rational thinking in irrational times! Thanks Ben!

[@alankoslowski9473]

Welcome back Ben! We missed you so much and were really pining for our rationality fix.

[@teubank88]

Next time you're craving a fix, check out the podcast...a weekly dose of rationality, jumbo sized.

[@rexmundi273]

Can you do an update on the inverted yield curve? US30Y-US05Y inverted last week and US10Y-US02Y is close to inverting.

[@CaseyBurnsInvesting]

Profiting from War is an American Classic.

[@ChrisSketch89]

He’s Canadian, so…

[@w7855]

Do you comment on every video from popular finance you tubers? Spam spam spam

[@afnbhafpobapiysb7203]

Hi, could you please compare starting a business, buying a business that is already in motion, and investing? I am a big fan of your videos. You are literally the only reliable source on youtube. It would be great to see you tackle this with your evidence based approach.

[@willchatman8935]

Ben i would like u to speak about the American I bonds. Thanks a mill

[@davidmolina7341]

Ben, I sense some progresive relaxation in your dressing code... :)

[@rgauci5800]

I was just looking through your videos hoping for some insight! Thanks for the video!

[@anaestereo810]

He is back! The man! The legend!

[@BarnCatGary]

Fantastic information and perspectives! Thanks!

[@julientousignant9652]

The timing of this video is just perfect. I really needed to hear this. Thanks Ben.

[@tuams]

I wish you made more videos! Been following you for a while. Thank you for the rational take on the situation.

[@ralphbuschmann740]

The best Video on the topic I have seen - and I have seen many!

[@leva.350]

Thanks for the video. I'm from Russia. Although the Russian market has not fallen as much as it could, investors may now have limited access to diversification due to the mass departures of foreign brokers. I hope IB will remain available to customers from our country

[@pistopit7142]

I hope nothing will be available in your country untill you back out from Ukraine and long after.

[@brydensears6318]

Great video

[@KserkS]

Thanks Ben

[@MarcelloNesca]

Ben, not sure if you realize this but in some ways you are a financial therapist, not just a portfolio manager :D

[@jimbojimbo6873]

I forgot Bonds even exist

[@Terax56]

Thank you

[@nitad001]

Return of The King

[@Unknown-jt1jo]

Happiness is a new Ben Felix video.

[@felipemelendezcarrillo8504]

So much valuable information. Thanks!!

[@anthonyborg5897]

I always appreciate your well informed videos. I look forward to your future ones, thanks!

[@James-od9dm]

Really like your videos; they are solid, sound work. Question: Why are your videos listed as for kids? This means I cannot make YT notify me when you post. And I want to be notified!

[@BenFelixCSI]

I’ll have to look into that. They should not be listed as for kids. Thanks!

[@edwardmauer7442]

Hey Ben, long time viewer. I think I have a great idea for a future video I and I'm sure many others would love to see, the apparent persistent overpriced nature of derivatives. Is the volatility premium a factor akin to value and size? Seems like something right up your alley. thx

[@photomukund]

Long time, no hear Felix. Good to have you back. My exposure to both countries is via foreign companies with operations exposure. But, fundamentals are still there. Part of me believes capital market should support Ukraine by keeping their investments intact. But that's just an opinion.

[@prestonlui6451]

He is more active in the podcast space though

[@alexxx4434]

War is an ultimate manifestation of competition. Yeah, there is such a thing as too much competition.

[@fede198888]

Ben, which scientific journal do you suggest to read/check to improve my understanding of portfolio management, risk calculation, ETF etc... I have found the journal of investing for example, publisher: portfolio management research...what do you think? What are some good foundamental books? I am not scared about tough mathematics or university books... Thank you!!!

[@StephanWoelcher]

Ben, how would you recommend an average retail investor to get into bonds? Are there similar tips to what you frequently share for stocks?

[@swissarmyknight4306]

Personally, I use VBTLX to trade in bonds. Vanguard does all the work, you collect all the profit, minus the 0.05% expense ratio.

[@p.c.h.6721]

Where have you been Ben? Glad to see you back

[@BenFelixCSI]

Taking a nap 😴

[@p.c.h.6721]

@@BenFelixCSI Hope to see videos from you more frequently, your videos are arguably the best in the sector, thanks 🙏

[@bruxis]

In the US, is there a solid set of ETFs that follow the global stock market and global bond market? Not VXUS/SCHF as they exclude many countries.

[@AAkCN1]

he returns. thx. Great video as always

[@AAkCN1]

Spam in the replies

[@arielmarks1236]

Great stuff man!

[@Kavanhugh]

Been waiting so long for a new video

[@matthewroberts4698]

What do you do when sanctions prevent someone from globally diversifying? We can't invest in Russian commodity markets anymore. Not that I'm picking a side, but its a fair question.

[@Joe-jh8po]

Vanguard FTSE Global All Cap or similar low cost funds offer global diversification. Having global diversification doesn't mean you must have every country represented, so I wouldn't worry too much about excluding the Russian economy in my own personal opinion.

[@pistopit7142]

@@Joe-jh8po I would worry more about including Russia in my portfolio. Ethically it is inapropriate. The fund you have mentioned from vanguard has gratelly reduced Russia's % so that is a good news.

[@dairysmoreta6108]

Welcome back dude! We missed you! 😭😭😭😭

[@Lordsun122]

Our boi is back!

[@sne4ky647]

I was waiting for this, thank you

[@javierrruiz1]

Good to see you back

[@MrWilson-zx9ix]

Cheers Ben.

[@MarcNemitz]

Thx a lot for this very informativ video and best greetings from Germany.

[@Martin-qb2mw]

Thanks Ben!

[@louisparry-mills9132]

can you do a video on how to game the market by manufacturing an international conflict ? thank you

[@relayernj]

Welcome back!

[@riyanpramudya5184]

Yasss, I'm so happy to see you again 😄

[@alexxx4434]

1:41 Classic risk premium?

[@Eurotool]

Heads up, volume is low compared to KZbin standard

[@danielmatheson4831]

the goat has uploaded at last

[@florin.dumitru]

Thank you Ben for your research and useful information!

[@tudon5774]

Ben is the man.

[@rosskline]

Great video! Do you have a video on the importance of bonds in a diversified portfolio? I understand the way they reduce risk, both legally and in terms protfolio volatility, but is that actually advantageous? Wouldn't an investor be better off owning more shares of a diversified group of companies with significantly greater potential return? Doesn't diversification nullify the purpose of owning bonds? Unless of course growth is not desired and consistent income is all that matters. I'm specifically thinking of an accumulating investor.

[@jorge5213]

Great video!

[@johnyjsl9219]

Damn, where were you Ben? That other intellectual hard to understand podcast you got?

[@preyger]

Ukrainian people thank you for your support!

[@istrasoft]

Would love to hear your POV on the "disposition effect" and also how to decide when to cut a loss, including the usual way that you base your analysis and conclusions on research papers and factual results ...

[@RebeccaEvans]

Appreciated

[@RebeccaEvans]

@+①④⑥⑨④⑧②⑦⓪⑦④whatsAℙP oh, look, it's my Nigerian prince

[@sobtrdeszl7806]

the audio is kinda low

[@SteveAgbaneje]

Where have you been, all this while

[@Amir-jn5mo]

Nice you made a summary video of the war and peace podcast episode. Is it possible for you guys to also discuss the barbell investing strategy? If bonds can also be so risky wouldn't it be better for me to instead of a 60 stock 40 bond allocation to have a 50 stock 50 HISA instead?

[@SS-sy4uu]

Ben we are waiting for the lease vs buying video

[@silverred6]

Can you just do this full time? These once every quarter videos just aren't enough.

[@aaronlojewski6819]

At 10:21 you accidentally said that it "increases" recover times but you meant to say "decreases" recover times.

[@BenFelixCSI]

Yes I pinned a comment with a correction. Thanks.

[@RodinThink28]

While everything Ben says makes sense from a pecuniary perspective, from a patriotic or moral perspective, I'd rather stick with Canada. The last thing I'd want to do is finance some far away conflict - similar to what many large corporations are doing by fleeing Russia

[@aeriagloris9323]

Welcome back lol. I missed your videos heh

[@3377ftw]

Where ya been????

[@CM_Burns]

unprovoked agression???????????????? what planet are you on?

[@gianmariopozzi1880]

Great content, as always

[@GTOYMPodcast]

Our investment God has returned.....

[@blackfiree91]

YAY

[@88peyote]

Like always amazing profesional content! Thanks Ben you are great!

[@djayjp]

Wonderful video as always! Could you please look at 60/40 UPRO (or TQQQ) and TMF? In case you can't/won't discuss specific securities, you could just analyze the strategy in general 3x daily leveraged terms. It doesn't just beat the market but destroys it!

[@robertbones326]

He's done a video on leveraged ETFs and stated the returns are unpredictable. They're designed for daily use, long term it's not certain. There are loads of securities that have "destroyed" the market.

[@djayjp]

@@robertbones326 But this isn't looking at the combination of both that and bonds (TMF) and how they provide much higher risk adjusted returns over decades.

[@lvelez6490]

I’m against the war and its horror. But this didn’t come out of nowhere. The bear was poked too many times and it now people saying it was unprovoked. Still, wrong though, don’t misunderstand. Yet you need to ask yourselves, how dis we get here. As always, its the common folk who hurt. War is about people that don’t know each other, fighting each other for the sake of those who do know each other yet don’t fight each other.

[@timofeytimotei2859]

aged like milk xD Unprovoked xDD

[@Manofsteel519]

I thought you gave up on KZbin

[@TheBasicStuff]

Reminds me of Fama & French's 'Volatility Lessons'. Sure, conflicts and wars are sources of great uncertainty but given the duration of most wars (e.g. WW1 & WW2) to last less than 10 years, it is safe to say no real conclusions about future expected returns can be drawn from the current short timeline of events.

[@BenFelixCSI]

This is a terrible and incorrect take, David. You’re likely talking about the US market after the 1929 crash. The 25 year number is based on a price only index (no dividends) in nominal terms. That period had massive deflation which boosts real returns. Accounting for dividends the market recovered in 15 years. Accounting for purchasing power it recovered in 7. I debunked this in an older video kzbin.info/www/bejne/gJmceKFrbddsfNk Edit to apologize for not being polite. Sorry David and thanks for the comment.

[@Ryan_Tinney]

@@BenFelixCSI It is hard to compare countries that have had their infrastructure destroyed to what America and Canada experienced in wartime. Canada and America has benefited from an industrial standpoint from wartimes.

[@BenFelixCSI]

The recapitalization required to rebuild an economy after its physical infrastructure has been destroyed does reduce market returns relative to economic growth as the economic growth is spread across lots of new shares in existing and new companies. However, historically, countries like Germany and Japan have recovered after wars. This is also why global diversification is a necessity.

[@BenFelixCSI]

It was specific to that recovery. The tight US monetary policy, which resulted in deflation, is thought to be one of the main reasons that the depression was as bad as it was. That experience informed future monetary policy.

[@toromontana8290]

Bonds suck. Stonks or bust!

[@NR-qd2st]

Great content again, more please! Thank you a lot for this insights and clear thoughts.

[@tom6039]

How many rug pulls will it take before you stop pumping international investing?

[@Steven-wq8tx]

Diversification wins once again

[@ramzib.1092]

4:01 "Financial markets are inherently uncertain, random, and difficult to learn from"... this is the gist of your investing philosophy. And I can't disagree more with this uninspiring philosophy. Markets have an element of randomness. But they are far from random. But I agree with you to the extent that those who are perplexed by the complexity of financial markets (your target audience) should stick to index investing, be satisfied with an average performance, and leave success to those who know that the market isn't random.

[@SpaceCoyote247]

too quiet

[@sergeipatiakin726]

Ben, please don't leave us again!

[@BenFelixCSI]

I’m back! No plans to leave again. I have two more videos recorded in the queue.

[@eeeeeek]

bro sounds like obama 💀

[@jonathankr]

You are a Maple Leaf fan! This obviously means you have been forced to diversify. Lol

[@BenFelixCSI]

I don’t watch sports. Never made sense to me as a source of entertainment.

[@739jep]

@@BenFelixCSI a leafs fan would say that 😂

[@notafantbh]

yeah but what about a nuclear war? Better sell now! lol just kidding... maybe

[@tbarbuto2345]

Stock markets had positive real returns during WWII when nuclear weapons were actually used?

[@notafantbh]

@@tbarbuto2345 that's awesome news

[@ajrobbins368]

If bonds and stocks don't survive nuclear war, neither will cash. So what's the point selling? Unless you decide to invest the money in a bomb shelter.

[@ajrobbins368]

Gold, guns, and land have similar issues. Without civilization to defend property ownership, good luck hiding those resources from other people.

[@drassiodraws]

Thank God you're cute... LoL 😜

[@timofeytimotei2859]

Your best bet is to invest in Russia

[@baracamera]

Special Military Operation) Not war

[@FamilybudgetUa]

Thank you Ben! I live in Ukraine and this war is devastating. But with help if Canada, US and our western friends we will win the war and rebuild the economy! Lyubomyr

[@brendanh2097]

We support you and will help. I have donated personally but am very happy with out government's current proposal for a $33B aid package. Your country's courage is inspiring the world.

[@KserkS]

@@brendanh2097 thank you

[@---js7hr]

Thanks Ben

[@aminbakht9424]

welcome back!

[@save9160]

Ben I missed you so much!

[@BenFelixCSI]

Thanks. Missed you all too!

[@Devinfrbs]

I think I look forward to new video's from this channel the most. You put more research together than any other finance channel.

[@-serik]

It is always nice to watch you video, Ben. In Russia we have one major ETF provider. This war affected to ETF infrastructure. Maybe first time in ETF history. Market makers loose ability to provide liquidity because of currency exchange shock. Also Euroclear frozen transactions to our local depositary. My portfolio is globally diversified with stocks and bonds ETF. I hope our ETF infrastructure will be fixed soon. I hope this war will ends soon.

[@kristopherrobin4001]

Nice

[@shrimuyopa8117]

I am not so worried about war as much as I am about the Federal Reserve rate hikes. While not a perfect correlation, there certainly is a strong one.

[@pongop]

Very intriguing video! I appreciate the historical content. Niall Ferguson's book sounds interesting. I waasn't aware of him. I am reminded of what Peter Lynch said: "As I look back on it now, it's obvious that studying history and philosophy was much better preparation for the stock market than, say, studying statistics."

[@Arsenal2045]

This man has educated me through his youtube more than any formal education throughout my life