Avoiding investing’s nuclear option

Baron West of Spithead, a former First Sea Lord and Chief of the Naval Staff, recently discussed how the US made preparations to unleash nuclear weapons in the chaotic aftermath of the 2001 9/11 terror attacks. His revelation was sufficient to generate a sprinkling of newspaper headlines[1].

In fact, it was far from remarkable for the Americans to ready for immediate launch back in the day. As a Cold War warrior who served in Germany during the rise of Ronald Reagan’s “Star Wars” programme in the mid-1980s, I became pretty accustomed to “weapons hot” moments.

Of course, the fact that we are all still here tells us that calmer heads invariably prevailed. So it was with Baron West, who at the time held the posts of Commander-in-Chief Fleet, NATO Commander-in-Chief East Atlantic and NATO Commander Allied Naval Forces North.

As he recalled in an interview on the Lord Speaker’s Corner podcast: “I remember getting a phone call from our nuclear firing cell – the guys who finally, when all the codes go, press the buttons.

“They said, unbelievably, on my red phone: ‘Sir, the Americans are starting to move to immediate readiness for release in all systems. What do you want us to do?’ I said: ‘Don’t do anything.’”[2]

Wise words. The nuclear option was taken off the table as soon as Condoleezza Rice, the US’s National Security Adviser, spoke to her counterpart in Moscow and established Russia was not only uninvolved but terrified of being destroyed in misguided retaliation.

So what might the nuclear option be in investing? And what might it take for calmer heads to prevail when this form of Armageddon appears to be in play?

It may be tempting to think of a severe market crash as the obvious analogue. Failing that, perhaps extreme market volatility could fit the bill.

Such phenomena are not unfamiliar at present. Stocks linked to the artificial intelligence boom have been selling off in bursts, for example, while uncertainty surrounding the Autumn Budget has also set plenty of nerves jangling.

In my view, though, it is not the events themselves that should be seen as “nuclear”. Rather, it is how we react to them.

In investing, as in war, rash decisions can entail a tremendous cost. It is almost always better not to “press the button” – to use the jargon of the firing cell – because pressing the button is an admission that there is no way back.

As I have written before, this is not to imply a policy of eternal inertia is advisable. A response of some kind might well be necessary when circumstances change, not least since portfolios frequently benefit from prudent adjustments.

Yet it is vital that the response is sensible and measured. This means we may need to be patient, to be willing to move beyond a surfeit of “noise” and to be determined to question, question and question again.

I am sure Baron West – or Admiral West, as he was then – had something very similar in mind when he declared: “Don’t do anything.” The chances are that what he really meant was “Don’t do anything yet”.

Why? Because he was not going to accept the words of one person as the words of many. He was not going to act precipitously. He was not going to panic. He wanted to be fully informed before making any sort of move – a cautious, considered outlook that proved eminently sound.

I believe there is another helpful way of looking at all this. It offers a related lesson in appreciating the limited likelihood of an all-out cataclysm in the investment sphere.

Much of the history of nuclear near-misses suggests doomsday is likely to come only if a significant number of people – including the button-pressers themselves – commit to bringing about mutually assured destruction. The chain of command is surprisingly lengthy, with every link a potential failsafe.

Equally, many things have to go spectacularly wrong before a true investment catastrophe can occur. If the past is any guide, a complex and highly unlikely confluence of missteps and mishaps is required to set in motion a bona fide meltdown.

This is why genuinely devastating collapses are so few and far between. Crucially, it is also why there is normally no mean wisdom in remaining invested and thus being in a position to participate in the recovery when, as is usually the case, a setback turns out to be purely temporary.

Tony Conway, Investment Manager

November 2025

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