"If an [Intercontinental Ballistic Missile] is heading your way, the size and composition of your portfolio become irrelevant," BCA said.
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Investors should stay bullish on stocks despite the increased risk of a nuclear apocalypse, according to a note from BCA Research.
Since Russia invaded Ukraine in late February, Vladimir Putin has committed himself to orchestrate a regime change in Kyiv. "Anything less would be seen as a defeat for him," BCA said. If Putin succeeds in his objective, he will drain his country's resources as a Ukrainian insurgency is likely to be resistant to any Russian-installed Ukrainian leader.
That scenario would lead to a deterioration in Russian living standards and growing discontent among the Russian population, which is already showing early signs of happening as economic sanctions against Russia lead to bank runs and disablement of payment systems from Visa and Mastercard.
"If Putin concludes that he has no future, the risk is that he will decide that no one else should have a future either," BCA said. It's estimated Russia has more than 6,000 nuclear weapons, of which more than 3,000 are available for use today.
"Although there is a huge margin of error around any estimate, subjectively, we would assign an uncomfortably high 10% chance of a civilization-ending global nuclear war over the next 12 months," BCA Research said.
The research firm observed a spike in Google search interest for "Russia Nuclear Weapons," lending credence to the idea that the worry has spread to everyday people in recent weeks following the escalating tensions between Russia and western countries.
But the rising risk of a nuclear apocalypse does not mean investors should sell their stocks and head for the hills, according to the note. Instead, investors should stay bullish on stocks over the next 12 months because financial risks mean nothing in the face of an existential risk.
"If an ICBM [Intercontinental Ballistic Missile] is heading your way, the size and composition of your portfolio become irrelevant," BCA said.
That thinking echoes an experience market veteran Art Cashin had when he was working on Wall Street during the Cuban Missile Crisis in 1962. Rumors had hit Wall Street that Russia launched missiles headed towards the US, and Cashin attempted to sell stocks as the Dow Jones took a dive.
But Cashin's mentor stepped in and said, "Look kid, if you hear the missiles are flying, you buy them. You don't sell them. Cause if you're wrong, the trade will never clear. We'll all be dead."
The author of the BCA note, Peter Berezin, told Dealbook in an interview on Tuesday: "One scenario is that the conflict is contained and reaches some equilibrium. In that situation, stocks go up. If the threat doesn't dissipate, well, you probably won't be around to witness the aftermath."
