How to Protect Assets During Times of War

In turbulent times, how to protect personal wealth is a common dilemma. Many historical cases provide us with valuable lessons.

Geographic location is crucial

Choosing the right geographical location is crucial for asset protection. During World War II, a Jewish family dispersed to escape, with relatives who fled to France ultimately sent to concentration camps, while those who escaped to Portugal survived. In 1943, some Nazis began secretly transferring funds to South America instead of the Eurasian continent or the United States, which was a wise move at the time. When the Soviet Union collapsed in 1991, many ordinary people lost everything overnight because all their assets were in the country.

Maintain Clear Judgment

Even in difficult situations, one must maintain independent thinking and observe the trends of the situation. In 1942, Nomura Securities predicted that Japan might be defeated by observing details such as food shortages and the behavior of officers. They began to gradually sell stocks and instead purchase real estate, believing it would be the best value-preserving tool after the war. This decision laid the foundation for Nomura’s rapid development in the post-war period.

In contrast, many Jewish families in Germany in the 1930s harbored fantasies about the state and missed the opportunity to leave in time. By the time the “Kristallnacht” event occurred in 1938, it was no longer possible to leave. This reminds us that when we feel like “there’s no need to leave now,” it may actually be when we still have choices.

Avoid Betting on a Single Asset

In chaotic times, it is crucial not to put all your eggs in one basket. In 1937, even Churchill faced bankruptcy the following year due to leveraged long positions in the U.S. stock market. During World War II, wealthy German Jews suffered significant losses because most of their assets were concentrated in their home country. In modern society, changes occur even faster; the average lifespan of S&P 500 index constituents has decreased from 61 years in 1958 to less than 20 years today.

Beware of Custody Risks

In significant changes, property rights documents may become invalid. Bank deposits, precious metals, real estate, etc., are essentially forms of custody. During World War II, the estates of Polish nobility were confiscated by Germany, and after the war, they could not be reclaimed due to changes in government. In recent years, Russian tycoons’ assets in Western countries have been frozen. During World War II, the United States also froze the assets of Japanese Americans. In 1945, Yugoslavia deprived Germans within its borders of their nationality and property rights.

Gold Custody Strategy

Keeping your own assets is often safer than third-party custody. During World War II, gold stored in bank vaults in France was seized by the Germans, while gold hidden in secret locations was preserved. Some families choose to store part of their wealth in coins rather than gold bars, as coins are convenient for small transactions and help to pass through checkpoints during times of turmoil.

However, there are also risks associated with using gold during wartime: finding reliable buyers, potential significant discounts, and the need for proper concealment. Overall, the historical lesson is not to store valuable items in domestic bank safes.

Conclusion

Conflicts are the norm in human history. The wise approach is:

1. Do not concentrate all your assets in one investment; instead, diversify across asset classes, geographic locations, and custody methods.
2. Prepare for the future; do not wait until the situation worsens to think about taking action, as it may be too late by then.