Even before the war is over, the winning side needs to consider how to “win the peace” which will follow. The world has been fighting a war against the COVID-19 pandemic and as nearly universal vaccination approaches, investors need to think about how to win the peace. What does history tell us?

World War I

In the aftermath of World War I, the Allies punished Germany for its role as the main antagonist. Huge reparations were levied, and those financial claims put a big damper on the German population and its economy. This gave rise to Adolf Hitler and the Nazi Party in the 1920s and 1930s. In turn, the Allies ended up fighting another War in the 1940s, because they lost the peace.

World War II

The Allies learned their lesson from WWI. When Japan and Germany surrendered, the U.S. led an effort to shower grace on the German and Japanese people. To understand this, see a movie called Unbroken. When the Japanese waved the white flag, the U.S. dropped supplies into their enemy’s hands immediately. Also, the U.S. and its European allies developed the Marshall Plan. This helped the German and Japanese economy to thrive, and they became leading 20th Century economic powerhouses. We won the peace!

COVID-19 Pandemic

Since the War against COVID-19 isn’t won yet, investors are hesitant to think about “winning the peace.” The fight against the virus is affecting certain East Coast and Midwestern states much more than it is in states which have more heavily vaccinated and/or have seen a larger part of their population test positive for COVID-19.

Therefore, it seems like a strategy for winning the peace makes more sense at the end of the first quarter of 2021, instead of trying to make any more money from fighting the war on the pandemic.

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