Europe had been moving towards the slaughterhouse for years, and by 1914 a conflict was all but inevitable—that, at least, is the argument often made in hindsight. Yet at the time, as Niall Ferguson, a historian, noted in a paper published in 2008, it did not feel that way to investors. For them, World War I came as a shock. Until the week before it erupted, prices in the bond, currency and money markets barely budged. Then all hell broke loose.
In short, it does not look anything like the panic you might expect if the odds of the world plunging into war were edging higher. The brightest conclusion is that such odds really are close to zero. A darker one is that, like the investors of 1914, today’s may soon be blindsided. History points to a third possibility: that even if investors expect a major war, there is little they can do to reliably profit from it.