How would you invest if a world war broke out? Warren Buffett has the answer — and it should change how Canadians think about cash

That anxiety is hitting close to home. A February 2026 Politico survey asked more than 10,000 adults in five countries how they view the global security situation. The majority of Canadians, Americans, Britons and French respondents said they believe a new world war is more likely than not within the next five years (3). The share of respondents predicting a global conflict has risen sharply since the same question was asked in March 2025.

So what should investors do? According to Warren Buffett, the answer is surprisingly straightforward.

“I will still be buying the stock,” Buffett told CNBC during a 2014 interview, referring to the broader stock market (4). The Oracle of Omaha has been making the case for staying invested in productive assets — stocks, real estate, farmland — through geopolitical chaos for decades.

Here’s why his view still holds, and what it means for Canadians navigating the markets right now.

The productivity shield

In general, geopolitical tensions tend to weaken investors’ appetite for risk, pushing money out of stocks and bonds and into safer-seeming assets like gold and cash.

But Buffett argues this is the wrong instinct.

“You’re going to be a lot better off owning productive assets,” he said. His reasoning draws directly from history. A Standard & Poor’s report, published shortly after September 11, 2001, noted that in the five months following the attack on Pearl Harbor — which ushered in U.S. involvement in the Second World War — the S&P 500 Index fell almost 17% (5). But by the time the war ended in 1945, the index had advanced 62% from its December 7, 1941 level.

The broader pattern holds up beyond the U.S. market. According to research by Hartford Funds and Ned Davis Research, stocks generated positive performance one year after an act of aggression in 73% of armed conflicts since the Second World War (6). In other words, the longer the investment horizon, the more likely the positive return.

Canada’s stock market held up incredibly well in 2025. The S&P/TSX Composite Index gained roughly 29% for the year — its strongest performance since 2009, according to Morningstar Canada (7) — even as tariff threats, Canada-U.S. trade tensions and geopolitical uncertainty dominated the headlines. The S&P 500 returned almost 17% over the same period (8).

The TSX’s composition partly explains that outperformance. Canada’s benchmark index is dominated by financials (roughly 32% of the index), materials (17%) and energy (15%) — sectors that can benefit from the kinds of geopolitical pressures that drag down tech-heavy U.S. indexes (7). When tensions in the Middle East pushed oil prices higher in late March 2026, Canadian energy majors Suncor and Canadian Natural Resources each rose more than 2%, even as the broader TSX dipped on the same day (9).

“The materials sector benefited from rising prices in gold, copper, and other critical minerals, as investors sought hedges against geopolitical and inflation risks,” Ashish Dewan, investment strategist at Vanguard Canada, told Morningstar Canada (10).

Canadian investors aren’t sheltered from global shocks — and 2026 has already made that clear. The TSX dropped 1.53% on March 26, 2026, as the Iran crisis rattled North American markets (11). But how the index is constructed provides a natural hedge that many investors don’t consider.

Cash is a clear loser

Beyond stocks, Buffett’s most important warning may be what not to hold during a conflict.

“The one thing you could be quite sure of is if we went into some very major war, the value of money would go down,” he told CNBC. “That’s happened in virtually every war that I am aware of.”

Buffett’s logic is simple. War drives government spending, disrupts supply chains and increases prices of consumer goods, all of which drive inflation so your money buys you less over time. A currency that’s steadily losing purchasing power isn’t a safe haven — it’s a slow drain on your finances.

The past year has reinforced that concern for Canadians. The Bank of Canada ranked geopolitical risk as the single biggest downside risk to Canada’s economy, cited by half of the 28 industry participants polled in its Q4 2024 Market Participants Survey (12). Meanwhile, 64% of Canadians surveyed by Scotia Global Asset Management in fall 2025 said current economic conditions had affected their retirement plans — and 38% said they were more worried about funding their retirement than they were a year earlier (13).

Had these investors turned to cash during this period, they would not have been protected. Rather, it would have cost them the TSX’s near 29% gain.

Buffett believes farmland, real estate and any other asset class that generates a tangible return can be ideal for holding during a global conflict. In 2022, he stated that if someone offered him a 1% stake in all apartment buildings in the country for US$25 billion (approximately C$36 billion at current exchange rates), he would write them a cheque (14). The logic: No matter what’s happening in the broader economy, people still need shelter — and rental income tends to rise with inflation.

For investors who don’t own rental properties outright, real estate investment trusts (REITs) offer an easier way to invest in the sector without buying a property. Canadian REITs trade on the TSX like any other stock, and they’re required by law to distribute most of their taxable income to investors every year — making them a practical option for Canadians to generate regular income.

What Canadians can do right now

Past performance is never a guarantee of future returns, and no one can predict exactly how markets would behave in a full-scale global war. But Buffett’s framework — stay invested in productive assets, avoid fleeing to cash, keep a long-term horizon — has proven to withstand time and conflict.

When markets reach this level of uncertainty, a Certified Financial Planner (CFP) can help you build a strategy suited to your situation and risk tolerance. Administered by FP Canada, the CFP is the gold standard for financial planning — and CFPs are held to a fiduciary standard, meaning they’re legally required to act in your best interest.