When there are signs that conflict or war might break out, nervous investors who hold stocks issued by governments often become extremely worried and sell their shares quickly. This hasty decision usually results in these investors suffering financial losses while more experienced and speculative traders profit from the situation.
Beyond its surface meaning, this quote highlights several key aspects of market behavior during times of uncertainty. First, it underscores how fear can drive irrational actions among less seasoned investors who are not equipped to withstand volatile conditions. Secondly, the quote points out that there is often an element of timing in successful trading; those who can wait out short-term panic and react strategically when prices drop may find themselves benefiting from a sudden market downturn. Lastly, it implies that government-issued stocks or bonds might not be as safe or stable as some investors assume, especially during periods marked by geopolitical tension.
Randal Cremer was an English politician and trade union leader who lived in the late 19th and early 20th centuries. He is best known for his advocacy of arbitration to prevent war, which earned him a Nobel Peace Prize in 1903. His insights into economic behavior during times of conflict reflect both his understanding of market dynamics and his broader interest in how nations can maintain peace and stability amidst global tensions.
