How to Protect Assets in Turbulent Times

In uncertain times, protecting personal wealth becomes especially important. Here are some key considerations and strategies:

1. Geographic location is crucial.

Choosing the right geographical location can be the key to determining one's fate. Historically, there are many cases that show that different geographical choices lead to vastly different outcomes. For example, during World War II, a Jewish family dispersed and fled, with those who went to France facing a tragic fate, while those who went to Portugal survived. In 1943, some Nazis began to transfer 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 their home country.

2. Maintain sharp insight and independent judgment.

Even in situations with limited information, one should strive to gain insight into the truth of the situation. In 1942, Nomura Securities sensed that Japan might ultimately be defeated by observing details such as food shortages and the dismantling of palace fences, as well as the anxiety of military officers' geisha girlfriends. They began to gradually sell off stocks and instead purchase land and real estate, believing these would become the best tools for preserving value during post-war reconstruction. This decision laid the foundation for Nomura's rapid development after the war.

In contrast, many wealthy Jewish families in Germany in the 1930s maintained blind trust in the state, missing the opportunity to leave in time. By the time the "Kristallnacht" event occurred in 1938, it was too late to leave. Einstein, on the other hand, made a wise decision and moved to Princeton University to teach early on.

3. Avoid betting on a single asset

During turbulent times, it is especially important to diversify investments. In 1937, even Churchill was tempted by the American bull market to leverage long positions, only to face liquidation in 1938. The Jewish wealthy in Germany ended up with nothing as most of their assets were domestic. The pace of change in modern society is even faster; the average lifespan of S&P 500 component companies has decreased from 61 years in 1958 to around 18 years in 2020, and it is estimated that by 2030 it may be only 12 years.

4. Beware of Custody Risks

It is important to realize that in significant changes, the existing property rights system may be overturned. Bank deposits, gold reserves, real estate, and so on actually rely on the credit of third parties. During World War II, Polish nobility had their estates confiscated by Germany, and after the war, they could not reclaim them due to changes in government. In recent years, the assets of Russian oligarchs in NATO countries have been frozen. During World War II, the United States also froze Japanese assets in the U.S., and 120,000 Japanese Americans were sent to internment camps. In 1945, Yugoslavia stripped all Germans within its borders (, including civilians ), of their nationality and property rights.

5. Gold Reserve Strategy

Self-custodied gold is safer than third-party custody. During World War II, gold stored in safes at French banks was confiscated by the German army, while gold that was secretly buried was preserved. A Jewish family kept 10% of their wealth in gold, mostly in coins rather than bars, because coins are convenient for smaller payments and help pass through checkpoints during turmoil. However, the experience of France in 1939 shows that even gold has issues such as trading difficulties, price discounts, and concealment risks.

6. Conclusion

History tells us that turmoil is the norm, while peace and prosperity are rare. In the recorded 3,500 years of human history, there have been less than 300 years without war globally. Therefore, we suggest:

• Adhere to asset diversification, including diversification of asset classes, geographical locations, and custody methods.
• Prepare for the unexpected, do not have a sense of false security, when the situation deteriorates to the point where everyone wants to evacuate, it is often too late.