Since the end of the Cold War, investment decisions, particularly in the West, have been built on the implicit assumption of U.S. primacy, regulatory predictability, and globalization’s inexorable march. But this order is unravelling. The world is sliding into a multipolar system where economic and political power is more diffusely distributed across regions and regimes.

The implications are profound. From China’s techno-industrial ascent to Europe’s strategic reawakening, the challenge is no longer simply assessing economic fundamentals. It integrates a structural understanding of political power, cultural fragmentation, and strategic competition into every investment thesis.

Geopolitics is at the core of these changes, and as such is reshaping global capital flows, portfolio strategy, and institutional decision-making. Inflation, protectionism, currency debasement, monetary policy, even war – geopolitics touches all these risks, and more. Building and maintaining a geopolitical analytical framework is no longer peripheral to making decisions – it is essential.

Institutional Awakening or Window Dressing?

According to a report by UBS, 62% of family offices now cite geopolitical conflict as their primary long-term fear. Institutions are responding to this fear, with banks like Citi, Goldman Sachs, Lazard, and BCG having all debuted formal geopolitical advisory capabilities in recent years.

Developing geopolitical expertise, however, is not as simple as announcing a center staffed with well-known names from the policy or defense world. The perceived unimportance of geopolitics for the last 30 years means there has been a shortage of practitioners with the requisite level of experience to create, maintain, and challenge geopolitical models. Without sophisticated analytical models, it is impossible to connect dots across borders, disciplines, and asset classes.

Until geopolitics becomes a cross-cutting discipline rather than a decorative appendage, many financial firms will continue to misprice risk and miss opportunity. True strategic thinking requires a systemic lens – one that integrates macro forces, historical context, and local dynamics into financial decisions.

As the global order transforms, so does the path of capital. After a 25+ year bull run in U.S. assets – marked by deep liquidity, strong returns, and relative stability – smart capital is now scanning for alternatives not only to hedge against volatility, but to capture long-term growth.

Mexico stands out. Despite political tensions, its manufacturing base is poised to benefit disproportionately from U.S.- China decoupling. Europe, long criticized for its slow growth and strategic inertia, is now channeling public funds into industrial revitalization. And even China – despite mounting geopolitical friction – presents compelling opportunities in selected sectors, especially where valuations are depressed relative to long-term potential.

These are all structural reallocations premised on a world where value is no longer concentrated in one hegemonic system.

Repricing Risk in a Fractured World

Investors must now confront questions that would have seemed too academic a decade ago: Can India or Brazil serve as new nodes of stability, or will they become arenas for great power competition? Are certain markets mispricing political risk because they continue to rely on outdated assumptions of global governance?

In this environment, asset classes that were once considered “safe” – like U.S. Treasuries or global index funds – may no longer offer the diversification or protection they promise. Meanwhile, thematic investments in supply chain localization, energy transition, and national tech ecosystems are gaining new salience.

Here, too, geopolitics drives opportunity. Increased international competition necessarily means governments will support initiatives to be at the forefront of technological innovation. Doomsday geopolitical prophets routinely declare World War III is nigh – sometimes in the South China Sea, sometimes in the Middle East, sometimes in Europe – the place changes but the hysteria remains.

The real conflict is happening on the frontlines of semiconductor manufacturing, biotech advances, and the first true energy transition since oil displaced coal in the early 20th century. Think of the competition over vaccines and personal protective equipment during COVID, or the EV competition between Tesla and BYD, or the semiconductor restrictions that have failed to constrain China, or China’s prominence in global mineral supply chains – this is where geopolitics is reshaping the world on a daily and inexorable basis.

Distinguishing Signal from Noise

Geopolitical forecasting is not about predicting black swans. True black swans, by definition, cannot be predicted. What matters instead is constructing robust frameworks to distinguish durable trends – like multipolarity or the erosion of institutional consensus – from sensationalist headlines.

This is where most financial firms falter. Mired in reactive models, overexposed to media cycles, confident (complacent?) in the passive and index-dominated status quo, they lack the analytical muscle to challenge their own assumptions and the flexibility to do things differently.

As Mike Tyson famously once said, everyone has a plan until they get punched in the mouth. Geopolitics is the right hook. Geopolitics affects everything and everyone. There is no avoiding its impact. The competitive edge that geopolitical analysis offers is not prescience of the future but preparedness for change. Done well, geopolitical analysis ensures one is never surprised or paralyzed at the prospect of change, and at a time of volatility spiraling, this kind of situational awareness is priceless.

If you’re interested in learning more about Bespoke’s approach to private wealth management and how we can help you build a secure financial future, we invite you to reach out to us directly. We’d be happy to set up a confidential consultation at your convenience.

Thank you for considering Bespoke as your partner in wealth management. We look forward to the opportunity to work with you.

This information is intended for general educational purposes only and should not be construed as legal or investment advice.