Best investments during phase 2 (2030-2070), predicting the future

The safest place to put money is likely to be in either high on demand items you can use for bartering, dividend paying stocks (as opposed to non-dividend, purely speculative stocks) gold or even silver.

During WW2, many large investors in the United States, Britain, Germany and Japan managed to identify and predict the monumental turning points in the war even as individual experts and other observers did not. The U.S. stock market turned upward around the Battle of Midway in late May of 1943. The British stock market bottomed just before the Battle of Britain in 1940, the German market reached its peak as Hitler's army attacked Russia (which marked the German war machine's first big key losses) in December 1941. Japan's market peaked in 1942, despite the tightly controlled pro-war propaganda published by the Empire's media.

But what are the lessons learned here? For protecting wealth, stocks are better bet than bonds (real property can get confiscated). Gold and jewelry can be a great alternative but can still end up as “problematic”, especially to convert in the short term as your government may temporarily leave the gold standard to counter overinvestment in this alternative.

Over the long run, equities (stocks – company ownership) is a good alternative even in countries that are losing a war, because historically, even they have managed to beat inflation. Just keep in mind that certain companies, especially those companies who are aiding the losing side always risk being wiped or expropriated by players on the winning side. Some will say that investing in index (a great variety of industries) is the safest bet but obviously, predicting which industry will do well is a lot better.

Another message from history is that even in the “lucky countries” (countries on the winning side that don't suffer catastrophic attacks) wealth invested should be diversified. There are no magnificent long-term, stocks to put away forever, and there never have been because no company has ever had a sustainable, forever competitive advantage. Excellence that lasts over multiple decades is virtually nonexistent. Also bear in mind that wars will open a lot of windows and in the aftermath lead to accelerated technological progress.

Business evolution seems to consist of a company developing a competitive advantage, exploiting its edge, and becoming successful. Its share price soars, and soon it is discovered and thereafter becomes a growth stock. As the company grows and gets bigger, it attracts competition and inevitably becomes less creative and competitive. Then as it ages, its growth slows and eventually it stagnates or becomes obsolete. There is usually far less innovation in large, mature companies.

The British East India Company in the seventeenth and eighteenth centuries had a total monopoly in four countries, possessed worldwide dominance in everything from coffee and wool to opium, had its own army and navy, and was actually empowered by the Crown to wage war if necessary. However the world changed, it didn't, and its “massive core” collapsed in the face of technological innovation. It went out of business in 1873.

In 1917, Forbes published a list of the 100 largest U.S. companies. Over the next 71 years there was the Great Depression, World War II, the inflation of the 1970s, and the spectacular postwar boom. When Forbes reviewed the original list in 1987, 61 of the companies no longer existed for one reason or another. Of the rest, 21 still were in business but no longer were in the top 100. Only 18 were, and with the exception of General Electric and Kodak, they were all underperforming.

Another study lists a database of the operating performance of 6772 companies across 40 industries in the postwar era. It was discovered that there was no safe industry. Above all, don't hold your eggs in a few big baskets. The old saying: “put all your eggs in one basket and then watch the basket” is a myth. The risks of putting all your resources in one basket are astronomical.