War exists always in human societies somewhere. During most of human history wars were relatively isolated from one another and affected only the fighters and the localities where they fought. Nearly concurrent with the industrial and financial and political revolutions of the past 200 years, world-wide wars have become the norm. The Napoleonic War of the early 19th century was really the first modern world war, affecting most of Europe and much of the Americas and led to rapid colonization of Asia and Africa.
The council of Vienna after Napoleon's defeat, the League of Nations and other post WWI peace efforts, and the United Nations and NATO efforts after WWII were all based upon ensuring and administering peace by the victors. After the USSR and its empire fell apart 25 years ago, the US was the largest armed force standing and became even more so than ever the world's policeman.
During the past six years a major policy change has set the US to begin withdrawing from its world policeman committments in all the obvious places and by reducing its armed forces. A primary result is that all the normal, local wars of this era are free to develop without major interference. A secondary and more significant result is that intra-national revolutions and regional power grabs that were previously unthinkable, or, at least "un-doable", are rapidly encircling the globe.
Even in the absence to date of a major war among the greater nations, a world war of multiple lightly-linked wars has developed rapidly over the past three years. If it were not for the globalization of the world economy in the past 45-7o years, these individual smaller wars would not be having much of an overall effect. Marine piracy in the Arabian and Indian Oceans, Benin Gulf, and Malacca Straights is an on-going trade hindrance along with port seizures, pipeline and refinery seizures and air transport takeouts. In the absence of a global policeman, pirates and politicians on the move will only proliferate.
Global trade is key for many natural resource materials--oil, metals, grains and much more-- given that the natural distribution of them in situ is uneven. Those who need them most must import much of their need. The same is true for distribution of finished goods output from TVs and ePhones to autos, trucks, war materiel, and processed foods from haves to have-nots. Nor should we ignore the export and import of financial goods (stocks, bonds, etc.) and debt financing for people, corporations, and governments.
With this recent human policy of decreased policing and our historic human tendency toward war at work, how should we invest, if we can? Should we assume that the traditional choice of exchange-listed stocks (60-80%) and tradable bonds (40-20%) will capture the beneficiaries of a world at war? Some say just do it and forget it as markets sort it all out for us. One assumption here is that markets will continue to function efficiently and another is that corporations will still represent economies to an extent greater than governments. Increasing involvement in the economy by governments everywhere, into crude goods in the ground, shipping, utilities, markets, banking, and aggressive taxing make us wonder.
Energy is the greatest trading sector: oil, gas, coal, and intermediate products such as lubricants and chemicals of all types. If we doubt traditional investment durability, either wholly or in part, energy is clearly a place for investment. The same is true for iron ore/steel, copper, and all the other industrial metals.
Agriculture has its own set of variables: population growth,decline, world weather and climate, fertilizer availability and policy, land ownership policy, taxation, war, and shipping. Some factors are the same as for energy and some are quite different and more variable.
Technical innovation is subject to many influences from war--migration of technical innovators and workers--to government control in war time, economic conditions, funds from demand and funds from entrepreneurial financing.
Finance and savings is a major concern with expanding wars and the ineluctable goverment growth in war and recent policy changes entail. Will the currency used where we live continue more or less on a steady decline due to central bank policy direction or will currencies decline in value more rapidly or collapse? Inflation is a normal accompaniment of war in every era due to increased government expenses and widespread economic disruption with decreased tax flows. Should we be looking to buy and hold currencies of countries likely to remain stable? What about day to day and normal expenses of life?
Clearly there are collectables and precious metals which generally do better than cash or financials during periods of war and threats of war and which preserve savings from inflation.
If you have read me in the past you'll know I've talked about investing "IN" rather than "FOR" retirement. Capital preservation and income were my main goals. Since income has been steadily disappearing over the past six years I reduced bond durations and exposure to the increased volatility of long term (duration) bonds. I've carried about ten percent in gold since the 1990's. As it increased in value and with additional purchases in the bear market since 2011, gold is now about 30% with some additional short term gold trading vehicles such as leveraged gold stock ETFs.
All bonds and "near cash" substitutes are gone, and cash is held in one to three month US TBills bought at auction. I have scaled into short US stock index ETFs, and will be looking to buy into some of the sectors mentioned above in energy, metals, agriculture, innovation, and finance if we get a reasonable pullback in world markets.