Everything in life, as Albert Einstein knew, is relative – even the threat of nuclear attack.
None of what follows, we should immediately stress, is to downplay recent suggestions North Korea may have more nuclear weapons than previously thought or to dismiss the potential threat under which many people in Eastern Asia consequently live.
We would simply point out some of the big issues humanity faces today are hardly new.
Threats to humanity are not new
Fans of Dan Carlin’s excellent Hardcore History podcast will already be aware that, scary as they may be, the projections North Korean leader Kim Jong-Un could have up to 50 nuclear weapons at his disposal by the end of this decade do gain some perspective when you think about the arsenals with which the US and the USSR were threatening each other during the 1950s and 1960s.
To offer just one example, consider the largest ever man-made explosion – the detonation by the Soviets of the so-called ‘Tsar Bomba’ hydrogen bomb 56 years ago this month.
That was a 50-megaton device – the equivalent yield of 50 million tons of TNT – which was only scaled back from 100 megatons as it was felt that at least gave those in the aircraft dropping the bomb a 50/50 chance of survival.
In the end, despite the huge shockwave that resulted Major Andrei Durnovtsev and his crew landed safely after delivering a bomb that produced a fireball 40 miles high and visible from 1,000 miles away.
If you want an idea of the damage a nuclear explosion that size would have caused, there is a fairly sobering map on Wikipedia of the extent to which it would have obliterated Paris and its suburbs.
That one explosion was some 420 times as powerful as Kim Jong-Un achieved with his latest weapon and, unlike North Korea, Russia had the wherewithal to deploy its arsenal.
Similarly, there are some terrifying transcripts from the height of the Cuban missile crisis, in which US president John F Kennedy is being urged by some of his advisers to get his retaliation in first.
For the record, the US’s biggest hydrogen bombs had a yield of ‘only’ 15 megatons but, like the USSR it had a staggering amount of them (at the time of its collapse the Soviet Union had some 45,000 nuclear weapons).
These were all pointed at the other country, offering some four minutes’ warning of an enemy attack – during which time the other side would have to decide whether or not to end civilization as they knew it.
Adding some perspective
The point of all this horror – and we have not even touched on biological and chemical weapons – is to try and add some perspective to the world today.
People can lose touch with just how bad things have looked and been in the past and, simply from an investment point of view, that can lead to them taking – or failing to take – actions that can harm their personal wealth for decades to come.
With the benefit of hindsight, we know that in spite of the extreme uncertainty caused by the nuclear arms race between the US and the USSR, equity markets performed very well – returning an average of 10% a year before dividends from 1954 to 1970 (past performance is no indication of how the markets may perform in the future of course).
Investors who had instead opted to stay in cash would have seen their savings destroyed by inflation during a period when the S&P500 index in the US tripled in value.
More recently, those who have wanted to could have seen the financial crisis as a reason not to invest – and then, say, the eurozone crisis and now North Korea.
The reality is, however, that there is no ‘perfect’ time to put money into the stockmarket and, if you are holding out for one, you are going to remain in cash forever – and, over the longer term, you are likely to be materially worse off as a result.