Lessons of history
As we lurch towards another election with an inevitable outcome, we at Montgomery are surprised by the expectations, held by some, that something dramatic will change next week.
The election will have little to no impact on the stock market, just as the election three years ago had no impact, nor the election before that, or the one before that.
Taking an historical perspective allows Montgomery to focus on the things that really matter and avoid being drawn into ‘noise’. Investing on the pretense that the election outcome might have some influence is a mistake. It won’t.
Similarly, lessons from history appear to suggest that US military action in Syria will have little lasting impact.
Syria has no natural resources of its own but its importance is strategic. Evidently, whoever controls Syria, Egypt and Libya could dominate the Middle East. Further, Russian support for Assad may be rooted in an arguably justified fear of fundamentalist Islam. In this context Vladimir Putin’s objections to US involvement in the Arab Spring is understandable.
Now sadly deceased, professor Jesse Rufus Fears provided the world with an excellent historical perspective on the Middle East.
In his September 2003 Stanton Sharp Lecture, entitled “The Lessons of Ancient Rome for America Today,” Dr Fears observed:
“American troops are on patrol today in Baghdad. American men and women tread in the footsteps of so many armies who have come before—the charioteers of Ramses II, Pharaoh of Egypt; the Persian troops of Cyrus the Great; the Macedonian Phalanx of Alexander the Great; the Roman Legionnaires of Julius Caesar; the crusaders of Richard the Lion heart; the troops of Napoleon; the camel corps of Lawrence of Arabia. All these armies have come, many of them with good intentions, determined to impose Greek or Roman or Christian or Democratic values upon the Middle East. All have failed. All have gone away, leaving barely a trace in the sand. The Middle East endures.”
According to some analysts the Middle East does not want democracy and Syria is no exception. Accordingly they note, “There is no portion of the earth that has been fought over more consistently and more fruitlessly than Syria…The early kings of Sumer in the 3rd millennium B.C., fought the cities of Syria.” “Syria has been fought over by Babylonians, as well as by Egyptians and Hittites.”
In fact, the first known battle was the battle of Kadesh in 1274 B.C., waged by the Pharaoh of Egypt and the King of the Hittites. Both wished to control Syria.
And the conquest by foreigners has always been made more tempting by the civil discord and ethnic hatreds within Syria itself.
Experts on the ethnic and religious diversity in Syria note that the country is at least as complicated and “flammable” as Lebanon. And sadly for many Syrians, the very large Christian minority combined with Kurds and many religious sects means that, like Lebanon, the ability to satisfy the political desires of all these groups might simply always be a bridge too far.
1.http://thelastcanary.blogspot.com.au/2012/03/5-mar-2012.html
2.K.Sokoloff
Roger Montgomery is the Founder and Chairman of Montgomery Investment Management. Roger has over three decades of experience in funds management and related activities, including equities analysis, equity and derivatives strategy, trading and stockbroking. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
Chris B
:
Its great that the gas boom in USA has made Russia less important. I hate Putin, he is like one of those evil characters in a James Bond movie, like Dr Death.
Remember that story about the Russian spy who went against Putin and exiled in London. He got radioactive poisoning in a London restuarant from one of Putins mates and died a very very painful death, that was only in about 2007.
John Emmi
:
Hi Roger,
Really enjoying your site and the thoughts presented.
Whilst the election may not have much impact on companies in the short term, certain policy changes will have a positive (and neg) effect on some companies. Such as carbon tax adjustments, NBN.
Labor was very business unfriendly – and this did effect business confidence to a degree. So hopefully we will now get policy encouraging confidence, innovation and better infrastructure.
Cheers,
John
Roger Montgomery
:
Indeed.
Raymond Lundie
:
As a fourth grader at school we had an history teacher who use to say the mistakes of history always repeats themselves. Once you understand you may be in a position not to make the same mistakes.
The more I read and think about what is happening today the more his words ring in my ear. By the way I am no longer a fourth grader.
Roger Montgomery
:
Thanks Raymond.
Gokhan Kaya
:
In the light of risk management for our investment, I think it would be good to understand how nations are destroyed. Francis Schaeffer also provides very good perspective on how nations are destroyed @ http://www.youtube.com/watch?v=TET_a6IDUg8&list=PL08DAA18DB787859D & also in his books “How Should We Then Live?”.
Steve Baron
:
Intrinsically nothing in the stock market will change but there will be more uncertainty when there is a change of government as is likely. People become more unsure as they aren’t really sure what the new incoming government will actually implement in the way of policy. This may create some short term weakness in the market exposing investment opportunities.
James
:
Hi Roger,
After claiming to be first to predict that Australia was going into recession, you have gone all quiet about this now. When is this recession going to happen?
Roger Montgomery
:
Hi James, Check out the latest posts on the wealth effect of rising house prices. Time will tell whether the force of confidence from rising house prices is enough to push back against the weak retail environment (noted in GDP numbers this week) and rising unemployment (self evident)…
Jim
:
Putin is a dictator and is probably more dangerous than fundamentalist Islam.
Roger Montgomery
:
Sure but perhaps not true from an Australian perspective.
Peter Chapple
:
Hi Roger,
Any suggestions for reading material by J. R. Fears?
Peter
Roger Montgomery
:
Any of the papers and lecture transcripts if you can find them. Some references here: http://en.wikipedia.org/wiki/J._Rufus_Fears