In his 2008 best-seller, "Wealth, War & Wisdom," hedge fund manager Barton Biggs warns that investors must "assume the possibility of a breakdown of the civilized infrastructure."
And to prepare for a breakdown of civilization, "your safe haven must be self-sufficient and capable of growing some kind of food. . . . It should be well-stocked with seed, fertilizer, canned food, wine, medicine, clothes, etc." Bloomberg Markets suggested that by "etc." he meant guns, as Biggs added "a few rounds over the approaching brigands' heads would probably be a compelling persuader that there are easier farms to pillage."
That warning isn't from a hippie radical. Biggs was a respected Wall Street guru at Morgan Stanley for 30 years. As the company's chief global strategist, Institutional Investor magazine put him on its All-America Research Team 10 times. SmartMoney said: "Biggs is without question the premier prognosticator on the international scene and a mover of markets from Argentina to Hong Kong."
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Biggs is advising America's wealthy elite. But what about Main Street Americans? Investors often ask me where to invest today, even Bogleheads and investors committed to the Lazy Portfolio strategy. They see the Goldman Conspiracy manipulating this rally. That worries many.
What do you believe? What value do you give to "the future"? First, answer these three questions:
What's your investment strategy if you know you might die on Dec. 21, 2012? Or possibly this year after getting a negative diagnosis from an oncologist? Or maybe not till 2050 when the United Nations says global population will be 50% higher (rising from 6 billion now to 9 billion), while demand for energy, oil, gas and coal doubles and the global supply of those commodities remains relatively constant?
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Disaster films, terminal illnesses, 2050 and 'The End'
Behavioral economists have answers. But your gut's also good at predicting. So here's what you'll likely do:- You'll go see the upcoming disaster film "2012" about the end of the Mayan calendar. After all, it's by the same director who "destroyed" the earth in "The Day After Tomorrow," "Independence Day" and "Godzilla." No new investment strategies, but a must-see film, a great catharsis and distraction.
- If you had a terminal illness, the future is here, now. There's no tomorrow. You're concerned about protecting loved ones and future generations with what you have, and enjoying time with them.
- But how to invest for the "end of civilization" coming around 2050? The next 40 years will be confusing: accelerating struggles between aging populations and disenchanted youths, soaring commodity prices, global warming, peak oil, food shortages, famine, blackouts, rationing, civil disorder, increasing crime, worldwide jihads, riots, anarchy and other dark scenarios of a tomorrow with "warfare defining human life."
Yes, that's how doomsayers label the worst-case scenario. It also must be what ultraconservative guru Biggs worries about in his darker moments.
So back to the question: What will Main Street investors do? Here again, even with the planet's survival threatened, they'll go watch "2012," be entertained, experience a catharsis, feel relieved and afterward have dinner and slip back into denial. And later, they'll vote against anything that offers solutions to future problems, especially if it raises taxes.
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Why? Very simple: Our "brains aren't wired to fear the future," writes New York Times columnist Nicholas Kristof. We're wired to respond to crises, while pushing off the really big problems (health care, Social Security, etc.).
That's basic behavioral economics: Over tens of thousands of years, evolution has programmed our brains so that collectively we will behave in ways that are counterproductive, making an end-of-civilization scenario inevitable, a foregone conclusion, a self-fulfilling prophecy. Why? Because our brains are handicapped, we are literally incapable of acting soon enough to solve the problem.
