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“Investors diligently prepare portfolios based on the last 30 years of market behavior while remaining unaware of the potential for the return of devastating patterns that occurred outside their working lifetime,” writes Phillip Toews. With changes in the geopolitical and economic landscape occurring today on a scale we haven’t seen in decades, it may be wise for investors to study history beyond the recent past in order to truly understand the ramifications.

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Furthermore, with a transatlantic trade war only in its early stages, there is a very real risk of it metastasizing into a transatlantic tech war. As Henry Farrell and Abraham Newman write for Foreign Affairs, “Now, everyone in Europe can see the risks of relying on U.S. tech. It’s not just that technology might be turned off but that it might be used against European interests.”

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Moreover, there is a very close relationship between trade and capital flows. “While it is easy to focus on the immediate risk to global trade from US tariffs, the bigger investment risk may be from the resulting decline in global portable capital. The more the US administration weaponises trade and the dollar, the greater the risk that it prompts active capital repatriation,” writes Ian Harnett.

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Another under-appreciated risk is that to corporate profits as the result of attempts to reduce the federal deficit. As John Hussman writes, “It’s striking how little Wall Street analysts recognize the extent to which the government deficits of recent decades have contributed, directly and indirectly, to record corporate profits.”

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And with the benefit of a little hindsight, we may soon look back at recent history in a totally different light. As Peter Atwater writes, “Today’s financial-market excesses are different. There is a grotesqueness and a predatory element to them. What has strayed too far aren’t underwriting standards, as we saw in the run-up to the 2008 mortgage crisis, as much as it is our moral compass. We are now awash in something that might best be labeled ‘Caligulan Capitalism.'”

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