The Garrulous Jay – Battleships And Bombers

In the early 20th century, as the First World War was ravaging Europe, at heated debate was taking place across the Atlantic among the top brass of the US military.

On one side was the WW1 commander of the US Army Air Services, “Billy” Mitchell. Opposing his views were the Secretary of War, Newton Baker, and Secretary of the Navy, Josephus Daniels.

Mitchell was a committed advocate of the development of air power, contending that it would become central to neutralising other nations’ naval strength, with bombs being used to sink battleships.

Although the quotes may be apocryphal, his adversaries were dismissive.

Baker allegedly stated that, “That idea is so damned nonsensical and impossible that I am willing to stand on the bridge while that nitwit tries to hit it from the air.”

His Navy counterpart, Daniels was reported as saying, “I would be glad to stand bare headed on the deck or at the wheel of any battleship while Mitchell tried to take a crack at me from the air.”

The quotes are uncannily similar, from which one might draw one of two conclusions: either they are not strictly accurate, or the two men were guilty of appalling group think to compound their apparent arrogance… Possibly both.

This case was drawn to my attention on my MBA course as part of a module focused on scenario planning. It was used as a way to exemplify the importance of thinking the unthinkable when making important long-term strategic business decisions.

This past fortnight’s extraordinary events relating to Greenland called to mind the case study and the work we did together to explore our own ‘unthinkable’ scenarios off the back of it.

In my group’s case we considered the concept of ‘pension riots’. We envisaged a scenario in which the so-called demographic timebomb exploded in developed countries, as younger generations resorted to civil disobedience, exasperated by the increasing financial burden borne by them in support the elderly.

We are not there yet. I am surprised by this and still consider it a possible scenario as successive governments kick the old age social and healthcare cans down the road.

More broadly, however, Trump’s Arctic monkeying about serves as a timely reminder that contemplating what may seem like improbable scenarios, whether they be in business planning or investing or even in one’s personal life, can be a useful exercise.

It may not have a direct bearing upon one’s decisions in the near-term, but it allows one to accumulate a ‘store of readiness’.

As we have seen from the confusion, anxiety and differences of reaction to Trump’s pronouncements this week, surprise can place one at a significant disadvantage. The same could be said of the events that took place almost exactly four years ago in Ukraine.

When it comes to investing specifically, I think this approach can be particularly useful. Considering scenarios in which markets might inflate further, or indeed bubbles might burst, may not change our behaviour precisely because we are well prepared.