(A Sunday Book Club Post)

My Thoughts:

In a world crisscrossed with geopolitical faultlines, the bond market is supposedly the canary in the coal mine; but history suggests otherwise.

According to pre-WWI records, London's Rothschilds still believed that their bond investments were secure on August 1, 1914, when Germany declared war on Russia. They bet that Kaiser Wilhelm II was just playing a game of brinkmanship. Well, they ended up losing nearly half of their wealth.

"Once bitten, twice shy." This proverb, however, didn't resonate with the bond market.

In 1938, bond values remained relatively stable in the Swiss market, buoyed by the steadfast commitment of the United States to Trans-Atlantic trade. There's no panic even when Hitler invaded Poland on September 1, 1939. The bond market simply dismissed Poland as another dispensable Czechoslovakia. Incidentally, during the following eight months, it's "all quiet on the Western Front." A WWII looked unlikely, as reflected by public sentiment. Obviously, no one bothered to read "Mein Kampf." Hitler, of course, meant business.

Today, there's no shortage of threats from warmongers. Let's stay vigilant about our bond investments.

Author: renqiulan