“American civil war”
\nImage extraction: Firefly<\/p>\n
I wasn\u2019t able to make satisfactory trades during the COVID shock, and I\u2019ve reflected that this was because I lacked the fundamental and crucial mindset in investing: “mental preparation and scenario planning.”<\/p>\n
Overwhelmed by the global pandemic, my thinking froze. Facing stock prices that seemed to keep falling endlessly, I couldn\u2019t even take small test buy positions, let alone short positions. It was pathetic.<\/p>\n
From that reflection, I decided to prepare scenarios for as many situations as I could think of. This time, it\u2019s a U.S. civil war.<\/p>\n
America once fought divided between North and South, but here the background leading to a fight between blue and red, conservatives and Democrats, doesn\u2019t matter. In fact, whether it actually happens or not is unknowable at this point, and not important here.<\/p>\n
What matters more is considering the economic impacts, particularly on investments.<\/p>\n
If such a thing were to happen, stock and bond prices would move for reasons unique to that civil war. But rather than the unpredictable, I want to focus here only on general tendencies.<\/p>\n
Regardless of scale or duration, it comes down to the very general notion of “when a civil war breaks out in a country, usually\u2026.” The point of this post is to avoid being in a situation where I can\u2019t even sketch out basic price movements for stocks and bonds, like during COVID or the Russia\u2013Ukraine war. That level of depth is sufficient.<\/p>\n
Well, there\u2019s virtually no chance of a civil war happening in the U.S., but the scenario can also be applied to other countries.<\/p>\n
As case studies: Lebanon from 1975, Yugoslavia from 1991, Libya and Syria from 2011.<\/p>\n
Obviously these countries differ drastically from the U.S. in many ways\u2014geography, history, social structure, and above all, their role in global finance and the economy.<\/p>\n
Though the differences are vast, I still see value in looking at their cases, because what I really want to see is investor psychology.<\/p>\n
Investor psychology\u2014how they react in times of crisis\u2014can be referenced across different economic scales. Even if only broad tendencies emerge, that\u2019s useful enough.<\/p>\n
For simple research like this, I naturally asked AI. This time, claude.ai.<\/p>\n
To roughly summarize the impact on the country\u2019s market in summary…<\/p>\n
1. Syrian Civil War (2011\u2013)<\/p>\n
– Damascus Securities Exchange effectively halted after outbreak
\n– Government bond market nearly ceased functioning
\n– Neighboring countries:
\n– Lebanon and Jordan faced refugee-driven economic strain, stocks fell
\n– Turkey was initially hurt, later benefited as an alternative market<\/p>\n
2. Libyan Civil War (2011)<\/p>\n
– Tripoli Stock Exchange completely suspended for a time
\n– Government bond prices collapsed, effectively defaulted
\n– Neighboring countries: Egypt and Tunisia\u2019s stock prices fell in tandem
\n– Energy companies were especially volatile<\/p>\n
3. Yugoslav Wars (1991\u20131995)<\/p>\n
– Belgrade Stock Exchange functionality severely degraded
\n– Government bond market essentially collapsed
\n– Neighboring countries: Austria and Hungary saw temporary stock declines
\n– But politically stable nations recovered as safe destinations<\/p>\n
4. Lebanese Civil War (1975\u20131990)<\/p>\n
– Beirut Stock Exchange completely shut down in 1983
\n– Government bonds effectively defaulted
\n– Neighboring countries: Cyprus rose as an alternative financial hub
\n– Jordan and Kuwait\u2019s financial markets benefited<\/p>\n
The results are unsurprising. Commonalities:<\/p>\n
– Financial markets in civil war countries fall into dysfunction
\n– Nearby countries are affected, though political stability makes a major difference
\n– Alternative markets tend to rise
\n– Energy and resource firms are especially affected, though unclear if this is due to the Middle Eastern context.<\/p>\n
In short: civil war brings stock market collapse, bond collapse, currency collapse, and often drags down neighbors.<\/p>\n
Therefore, if news of such a conflict surfaces, preparation for full withdrawal from U.S. stocks, bonds, and the dollar is necessary. At least in the early stages, a complete pullout is the safer move.<\/p>\n
Markets may suspend trading, so quick action is required\u2014though I lack confidence here.<\/p>\n
One should also exit Canada and Mexico investments. North American logistics would be in shambles.<\/p>\n
Where to flee? Precious metals like gold and silver. Bitcoin will likely move in tandem with U.S. equities, so best to wait.<\/p>\n
As of September 2025, I infer that if a civil war broke out, it might be between an East\/West Coast alliance backed by international opinion versus a central bloc.<\/p>\n
In such a case, how well New York, the financial hub, escapes the conflict would also influence outcomes.<\/p>\n
If buying stocks at all, it would be defense industry firms.<\/p>\n
Even temporary closure of American exchanges would have massively destructive global consequences.<\/p>\n
First, G7 and other advanced nations\u2019 stocks and bonds would plunge.<\/p>\n
Currencies, especially dollar pairs, would swing wildly\u2014too volatile to trade in the short term.<\/p>\n
Even China, a U.S. rival, would suffer huge negative impacts due to economic interdependence.<\/p>\n
Depending on how weakened the U.S. becomes, China might attract capital, but so would Europe.<\/p>\n
As seen during President Trump\u2019s high-tariff era, Europe serves as a strong alternative when the U.S. falters. Investors fleeing the U.S. often turn to Europe.<\/p>\n
Thus, Europe, perhaps the U.K., would likely gain attention as an alternative market.<\/p>\n
– If civil war breaks out in the U.S.: total withdrawal from U.S. stocks, bonds, and the dollar.
\n– Shift to precious metals like gold and silver.
\n– If buying stocks, focus on defense industry.<\/p>\n
Then, depending on conditions, watch for U.S. stock, bond, and dollar bottoms.<\/p>\n
Alternative investment in Europe should also be considered, though remember power shifts occur slowly over decades.<\/p>\n
In past scenario analyses (e.g., WWIII, global depression), I could assume partial buy-ins after U.S. stocks fell 30\u201350%. But in a U.S. civil war scenario, the only conclusion is temporary full withdrawal from U.S. investments.<\/p>\n
Civil war is a form of “self-destruction” for a nation, different from wars with others or economic issues\u2014that\u2019s why withdrawal is necessary.<\/p>\n
And to repeat the obvious: I hope such a war never happens. I don\u2019t want to worry about the safety of friends in NY or LA. And, above all, it almost certainly won\u2019t happen.<\/p>\n","protected":false},"excerpt":{"rendered":"I wasn\u2019t able to make satisfactory trades during the COVID shock, and I\u2019ve reflected that this was because I lacked the fundamental and crucial mindset in investing: \"mental preparation and scenario planning.\"","protected":false},"author":1,"featured_media":2043,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2044","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-uncategorized"],"translation":{"provider":"WPGlobus","version":"3.0.2","language":"en","enabled_languages":["ja","en"],"languages":{"ja":{"title":true,"content":true,"excerpt":true},"en":{"title":true,"content":true,"excerpt":true}}},"yoast_head":"\n