Once or twice a generation there is a song released that is truly timeless. They are usually written in the context of current events. What makes them timeless is that the chords they strike are ones that reverberate throughout history, and often repeat themselves.
The release of “Everybody Wants to Rule the World1” in March of 1985 corresponded with the ascension of Mikhail Gorbachev, who succeeded Leonid Brezhnev as President of the Soviet Union2. This was after many years of escalating rhetoric between the US and USSR and increasing stockpiles of nuclear weapons. This occurred, of course, 23 years after October of 1962, when President John F. Kennedy dealt with the Cuban Missile Crisis after America deployed nuclear missiles in Italy and Turkey3. The Soviets raised the stakes in response by deploying their own missiles in Cuba. Many of us are reminded by our mothers and fathers of the duck-and-cover drills they did under their desks and in their hallways at school. Many of you were those frightened children.
The ominous ballad by Tears for Fears evokes images of a dark surveillance state and ponders the end of a way of life, possibly coming in the form of a nuclear holocaust as the ambitions of power and greed of world leaders overwhelm common sense. The song asks:
“One headline, why believe it?”
Headline: November 19, 2024: “Russia says Ukraine attacked it using U.S. long-range missiles, signals it’s ready for nuclear response” 4
As of the writing of this Tuesday morning, November 19th, the stock market at large does not believe it. If it did, the S&P 500 would be down a lot more than 0.43%. The Nasdaq would crater much more than 0.20%. Perhaps the way Kennedy flexed and handled the crisis in 1962, and how the cooler heads of Reagan and Gorbachev prevailed in the 1980s, have numbed us all to the dark possibilities that are out there. The market seems to have shrugged off the threat as more Russian saber-rattling. That could end up being the case, as their nuclear threats have been for some time.
But the themes of the 1980s are back. Everybody wants to rule the world. Russia wants to rule Ukraine. China wants to rule Taiwan. Iran wants to rule Israel. North Korea just wants a friend and will do anything for a strong one.
We have questions. Will all the aggressive nations collaborate to get what they want? Did the US just turn the key in their ignition with the authorization of the use of US missiles to strike the Russian Motherland? Can Putin and Biden come to terms? Do they actually want to? Will Trump get a chance to even negotiate, or will the conflict be too far inflamed at that point? Does the US have a vision here of how these conflicts abroad can end? Who is actually in charge here?
“I can’t stand this indecision, married with a lack of vision …”
Our point is that we have lots of questions and are being met with the collective yawn of the market. The stakes seem so high and yet the market rolls on. There’s a lot of optimism domestically that things can be changed, expenses can be cut and deficits reduced, which is all very positive. Meanwhile, the situation abroad both in Ukraine and Israel seems sketchy and the market valuation is quite high. (See last week’s article). In that mix lie very bullish catalysts and, of course, very bearish ones.
“All for freedom and for pleasure, nothing ever lasts forever …”
We’re not trying to scare anyone like Tears for Fears seemed to want to. Even if Russia uses a nuclear response, it may be limited to the use of tactical nuclear warheads deployed on a small area of a battlefield or perhaps a strike against Ukrainian farmland raising food prices everywhere and triggering more inflation. This Russian response, if there is one, doesn’t necessitate Mutually Assured Destruction with the US. We’re not trying to prophesy anything here. But ignoring the “one headline” would be ignoring our fiduciary duty and our Duty of Care as both advisors and portfolio managers as we are tasked with identifying threats to your accounts. We would remind you of our basket planning. Maybe your assets shouldn’t be all in the Growth Basket in the market. The same greed that drives your need for returns in the market can also be responsible for your downfall, just as it’s portrayed in the song. A responsible advisor separates out what you need from what you want and distributes your risk accordingly. We have done that for you. We’ve also hedged our bets in our Growth ETF portfolio and lowered risk there. Just know that a risk conversation is always appropriate if you want one.
“Everybody wants to rule the world.” We want to help you not just survive it but thrive in it. All of our baskets for your wealth can be deployed. Give us a call. In the meantime, let’s all say a prayer for our world that powerful adults make adult decisions once again.
Sincerely,
The WTA Investment Committee
Source:
1 https://www.lyrics.com/lyric/10257273/Everybody+Wants+to+Rule+the+World
2 https://history.state.gov/historicaldocuments/frus1981-88v05/preface
3 https://www.britannica.com/event/Cuban-missile-crisis
4 https://www.cnbc.com/2024/11/19/russia-says-ukraine-attacked-it-using-us-made-missiles.html
