The pitfalls of trading geopolitical risk

TALK TO THOSEBCA who regularly buy and sell financial assets in the world’s trouble spots and you soon come across a perennial source of irritation. Everybody is an expert. The prospect of conflict turns every know-nothing spreadsheet jockey into a military strategist or Kremlin-watcher. Buttonwood shares this indignation on behalf of newspaper columnists everywhere. Making bold statements based on a little knowledge is our racket. Move along, please. We’re already working this corner.There is plenty just now to occupy the armchair general. Geopolitical risk is on the rise after a pause for the pandemic, concludes a recent paper from Research. Three proto-conflicts in particular are hogging headlines and testing the resolve of the new administration in Washington. Russia has deployed enough troops to stage fresh incursions into eastern Ukraine. Iran has stepped up its nuclear programme, to the ire of Israel. And China is menacingly carrying out drills around the island of Taiwan.