Geopolitical volatility doesn’t matter if you are an investor:

The knee-jerk reaction of investors to geopolitical crises is to extrapolate the most recent events into the future and expect an escalation of a new conflict. This is when geopolitical experts are on TV and in the press with their predictions of World War III or a 1970s style oil shock and stagflation, etc.

Ignore those warnings and doom and gloom forecasts as in most cases they are based on an assumption that the crisis rapidly escalates and gets out of control. However, that rarely happens. Over the last 150 years we have seen only two instances where wars got out of control. They are called World War I and World War II.

But we have seen hundreds of instances when a war broke out that could conceivably trigger World War III but hasn’t. Think of the Korean War and the Vietnam War, the Cuban Missile Crisis, the many wars in the Middle East or the constant tensions between a nuclear armed North Korea and its neighbours. Think of the many civil uprising during the Arab Spring of 2011. Yet, things rarely get out of control because, well, people like to live in peaceful times and will do their best to avoid going to war. It requires staggering miscalculation on both sides to escalate a war.