Many of us watched news coverage of the multiple terrorist acts against the city of Paris, France, with a mixture of horror and dread. The horror was our natural response to terrorism, the feeling that arises when we ask ourselves: how can people think this way? The dread, of course, comes from the realization that these attacks could have, and might still; happen here—that is, wherever we happen to be sitting, whatever concert venue or restaurant we might be planning to visit.
Hard on these emotions comes outrage, and that helps illustrate something that is seldom realized about terrorism. In a recently published book entitled The Better Angels of Our Nature, author Steven Pinker points out that terrorism is far from a new phenomenon. After the Roman conquest, resistance fighters in Judea—who called themselves zealots—would stab unguarded Roman officials whenever the opportunity arose. In the 11th century, Shia Muslims launched furtive assassinations on officials who practiced a different version of their belief system. For 200 years, a cult in India strangled tens of thousands of people traveling through their country. The assassination of U.S. President William McKinley was executed by a particularly ugly breed of terrorist known at the time as anarchists. Most of us remember days when London and Belfast were routinely rocked by Irish Republican Army terror strikes, and in the U.S., the Weather Underground of the 1960s had a terrible habit of setting off explosives in public places.
The book lists many other instances of terrorist organizations, but all of them prove a point: eventually, each of these groups will go too far, provoke the consciousness of the general public in the wrong way, and turn sympathy to their cause into outrage. Pinker cites statistics that show that virtually zero terrorist organizations ever accomplish their aims, and they tend to die out after their most visible credibility-destroying “success.” The next year or two will most likely reveal the ISIS attacks on Paris to have been a fatal mistake for those who dream of an Islamic, Sharia-governed ruling body in Syria and Iraq.
As the horror of the events in Paris are translated into uncertainty about the world we live in—and, therefore, the safety of our assets, stock markets are likely to react with greater volatility, possibly on the downside. The markets often respond reflexively and negatively to threats to our safety.
But as the year proceeds through its last few weeks, wiser investors will likely prevail and any downturns should prove temporary. Fears that global enterprises are somehow worth less because of troubling events overseas will prove to be overblown. More importantly, after the events in Paris, the object of our horror and fear—the terrorist organization known as ISIS—will confront an opponent much more powerful: the resolve, disgust and repudiation of moderate members of the Muslim faith and of all faiths, in the Middle East and elsewhere.
The world changed over the weekend, but not in a way that affects the value of your investments. Sane people the world over will hope, pray, and work to create a more peaceful world, and SRI investors will continue to seek out investments in companies that will help bring about that world.