Why the West must invest in defence – and you should too

We’ve got used to a world without war between major powers, but that era is coming to an end as Russia threatens Ukraine and China eyes Taiwan. Buy defence stocks while they’re cheap, says Jonathan Compton

MoneyWeek cover illustration – Putin and Xi Jinping
(Image credit: © Adam Stower)

A regular and surreal night-time discussion with friends at my expensive single-sex boarding school was what we would do after the four-minute warning went off. This was the public alert system, which from 1953-1992 would warn of an imminent nuclear strike by the USSR. Rather than seeking shelter, it was agreed the best course of action was to race down to the nearby girls’ high school. Given it was at least a three-minute sprint and willing partners were probably hiding away or in a shelter, the naivety of our tactical plan is obvious now. Yet even during the MAD era (mutually assured destruction, in a nuclear conflict), warfare was still conventional and consisted of throwing vast amounts of ordnance at the enemy from the land, sea and air, then putting in troops to take over. There was also a reasonable belief that the Good Guys – us, Nato and democratic allies – would win. Both of these are now in serious doubt.

Britain has been involved in armed conflict somewhere in the world every year since 1914, so the UK’s last five peaceful months since our and other forces were unceremoniously bundled out of Afghanistan are highly unusual. Politicians and military chiefs are keen that this 20-year conflict is forgotten, while muttering that “lessons must be learnt”. This guarantees that the wrong conclusions will be reached; in practice, it was an old-fashioned, conventional guerrilla war. Modern warfare is about to change radically.

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Jonathan Compton was MD at Bedlam Asset Management and has spent 30 years in fund management, stockbroking and corporate finance.