I haven’t written much about investment issues recently, possibly because I can’t think of anything to say about them. (I just hope you aren’t loading up on equities or buying index funds.)

I am therefore adhering to Iron Law of Blogging No. 23: If you can’t think of anything to say about a subject you actually know something about, bloviate about something you know nothing whatsoever about.

Hence, Iraq. Specifically, the American-led invasion back in 2003.

In an America hopelessly divided on almost every important issue of the day, the one issue you can get almost unanimous opinion about is that the invasion of Iraq was a disaster. Naturally, I figure this must be wrong. Oh, sure, we defeated Saddam, tore down his stature, saw to it that he was found and hanged, and encouraged the formation of a sort of democracy in Iraq. Then we left. And all of this was accomplished with fewer American military dead than happened in one week on Okinawa, fewer than 10% of the deaths tallied in Vietnam.

So what’s not to like?

The trouble is, in the meantime everything went to hell. The Sunni insurgency took far more American lives than the invasion itself,(1) al-Qaeda got in on the act, and then, in what seemed like quick succession, we were treated to no-WMDs, massive civil disorder across the country, Abu Ghraib, the Mahmudiyah killings, the rise of the Shia militias, and so on and so on. Last I dared look at the newspapers, Iraq seemed to be descending rapidly into civil war,(2) as rebels spilled over into the country from Syria and captured resonant places like Ramadi and Fallujah.(3)

Meanwhile, across the Middle East, unrest seemed to spread like E. coli, as heretofore stable governments in Egypt, Libya, Tunisia and Yemen collapsed. Open civil war broke out in Syria and large and destabilizing protests bedeviled almost every other country: Algeria, Bahrain, Jordan, Kuwait, Mauritania, Morocco, Palestine, Saudi Arabia, Sudan, and even peaceful little Oman (ok, that was a minor one).

In the face of all this chaos, American public opinion about the war changed dramatically. From approval rates as high as 67% just before the invasion, by mid-2007 61% of Americans believed we should never have invaded Iraq. Today, only very small minorities believe the war was worthwhile and that hardy group continues to dwindle.(4)

Outside the US, international opinion was profoundly negative even before the invasion, and it has become even more negative over time. In some countries, north of 90% of the adult population views the invasion as a huge mistake.(5)

So what’s wrong with this picture? Can billions of people really be profoundly wrong? Well, sure they can. In fact, they usually are. In this case the reason they’re (probably) wrong (remember, I’m bloviating out of ignorance) is because their time horizon is too short.

War is obviously a terrible thing, and unless people feel directly threatened (as with Hitler and Tojo, or even the Taliban(6)), or unless the war goes extraordinarily smoothly, public opinion is likely to turn against war pretty quickly. “Support Our Troops by Bringing Them Home NOW!” says the bumper sticker.

But it’s very difficult to gauge the consequences of a war by looking at it over a short period of time – and this is an area I do know something about. You see, war only relates to matters of life and death, which don’t begin to grab us the way truly important things do – like our money. And people who invest money suffer from the same short-term poor judgment as people who have opinions about wars.

Consider investors who freaked out during 2008, sold everything and went to cash, and then forswore the stock market for years. They missed one of the greatest Bull Markets ever. Now that stocks have performed well recently -– up 30% in 2013 alone! – guess  what? Everyone is piling into stocks and index funds, having completely forgotten that they’d sworn never to by a stock again.

That’s short-termism, investment myopia, what the behavioral finance guys call short-term “framing.”(7) What investors should have been doing, of course, is exactly the opposite: they should have bought in 2009 and should be considering lightening up and being much more discriminating today. But don’t hold your breath.

And don’t hold your breath for people to change their minds about the Iraq War, either.  (As with science, progress on opinions about wars only happens one death at a time.) Whether a war seemed like a good idea or a bad one up front, war shakes things up Big Time, sometimes for the worse and sometimes for the better. With the Iraq War still ringing in our ears, it’s far too soon to know what the upshot will be.

Short-term, people are looking at recent chaos in Iraq and across the Middle East and concluding that we had no business messing around over there. But it’s already possible to view the war in a very different light, simply by looking at similar circumstances elsewhere in the world which have had more time to play out.

See, e.g., my next post.


(1) Astonishingly, only 139 American military personnel died in the invasion, despite being out numbered 5-to-1 by the Iraqi forces. (Over 800,000 Iraqi forces faced about 175,000 coalition troops, including 112,000 Americans.) That’s about a day and half of car crash deaths in the US. Incidentally, auto deaths actually peaked in 1937 at about 30 per 100,000 population. That number is about 10 today.

(2) While US troops were still in Iraq, all we heard was that the US presence was a huge irritant that was encouraging the insurgent radicals. So we left and the insurgency ballooned into a civil war.

(3) Resonant because US Marines, Navy Seals and other forces fought four very ugly, urban-warfare type battles against insurgents in Fallujah and Ramadi between 2004 and 2006. The Second Battle of Fallujah was the bloodiest of the war, not counting the invasion itself. Incidentally, that second brawl in Fallujah taught the insurgents something they were mistaken about, probably because they’d been reading glowing reports about their prowess in American newspapers. Namely, that they had no chance in a toe-to-toe battle against American troops.

(4) The Iraq War also suffered by comparison with the US intervention in Afghanistan, which was, at least until recently, much more popular. This was due mainly to the fact that the Taliban were obviously harboring Osama bin Laden, the architect of the September 2001 attacks on the World Trade Center.

(5) But keep in mind that if the US bought an ice cream soda, 77% of the world would view it negatively.

(6) See note 4.

(7) I.e., if I tell you that prices just went down 44% (i.e., 2008), you are highly unlikely to want to buy stocks, whereas if I tell you that prices just went up 35% (i.e., 2013), you are highly likely to buy stocks.

Next up: On Iraq, Part 2

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Please note that this post is intended to provide interested persons with an insight on the capital markets and is not intended to promote any manager or firm, nor does it intend to advertise their performance. All opinions expressed are those of Gregory Curtis and do not necessarily represent the views of Greycourt & Co., Inc., the wealth management firm with which he is associated. The information in this report is not intended to address the needs of any particular investor.

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