Why You Shouldn't Worry About North Korea - Views on News from Equitymaster

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The Equitymaster Research Digest

Why You Shouldn't Worry About North Korea
Aug 30, 2017

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North Korea is at it again!

Just when you thought the Sensex was headed to 40,000, the country fired a missile over Japan. Apparently, it had the capability of carrying a nuclear weapon.

You can expect yet another UN resolution against the country. More sanctions and maybe more dire warnings from Trump are possible. The US President has already said, 'all options are on the table'.

Of course, global markets fell. The Sensex fell 362.43 points or 1.14% yesterday. Nearly 100 stocks hit 52-week lows.

But does this worry us?

No...so long as a war doesn't break out.

What if it does?

Then yes, it would be a time for a serious re-think. But here's the thing...

No one can anticipate the outbreak of a war. In cases like these, where tensions escalate steadily, it's logical to assume there will come a point when good sense will win out and all sides begin a process of de-escalation.

This is what happened with India and China recently at Doklam. Tensions increased steadily until both sides agreed to de-escalate.

A situation to really panic would be one in which a war breaks out without warning. In such situations one thing can quickly lead to another and there would be no time for cooler heads to prevail.

So far, despite all the aggressive talk on both sides, cooler heads have prevailed in the US-North Korea face off.

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