Many will be familiar with Maslow’s Hierarchy of Needs: the idea that humans are motivated by five categories of needs, with higher-order ones (like self-esteem and entertainment) only emerging once more basic needs (like water, food, shelter, security and employment) are met.
We believe this framework is also applicable to nations, and offers a useful lens through which to understand the current global landscape.
Furthermore, we believe that many developed nations — who have for some time been luxuriating in higher-order needs — have increasingly done so at the expense of the foundational ones, to the point where the base can no longer support the top of the pyramid.
Governments are now being forced to reallocate resources from the top back to the bottom. A notable example is prime minister Keir Starmer’s February announcement to increase defence spending, funded by cuts to the overseas aid budget.
We believe this is happening now for a couple of reasons: a prolonged emphasis on higher-order goals at the expense of foundational ones; and a broader geopolitical shift toward national self-interest.
For decades following the fall of the Berlin Wall, developed nations benefitted from what became known as the Peace Dividend — a period marked by relative geopolitical stability, expanding global trade and a belief that essentials like energy, security and food would remain abundant and affordable.
Defence budgets were cut and attention turned to social progress, environmental agendas and speculative growth. But in many cases, this came at the cost of resilience.
Allied militaries weakened and conventional energy sources such as nuclear and natural gas were sidelined in favour of renewables, contributing to energy crises around the world. The cracks in that once-stable foundation are now impossible to ignore.
This framework maps closely to where we’re finding compelling investment opportunities through our bottom-up research
This reordering has been accelerated by a broader retreat from global cooperation toward national self-reliance, a trend that has been building over the past decade. Institutions that once defined global collaboration, such as the United Nations and World Trade Organisation, have become less effective or increasingly questioned.
Countries now recognise that, ultimately, they are responsible for their own security, energy, food supplies, or industrial success. As countries rebuild the base of their pyramid of needs, the implications for economies, industries and investments are only beginning to unfold.
Our focus is to navigate the risks this transformation introduces, and to capitalise on the underappreciated opportunities it creates. This framework not only helps contextualise the macro environment; it maps closely to where we’re finding compelling investment opportunities through our bottom-up research.
While we’re not averse to investing further up the pyramid, it’s a part of the market where the balance of risk and reward has become less favourable.
Years of social, political and market enthusiasm funnelled capital toward aspirational causes and consumer luxuries, creating fertile ground for strong performance, but also inflated expectations. As budgets tighten and priorities shift toward strategic essentials, those tailwinds may fade and valuations leave little room for missteps.
That said, we’re not entirely absent from the upper tiers of the pyramid — just selective. Nintendo, for example, has seen strong early demand for the new Switch 2, their next-generation gaming console. While near-term earnings remain muted, Nintendo’s continued expansion into films, digital content and theme parks is helping unlock the full value of its beloved intellectual property.
When it comes to financial security, we’ve found more compelling value outside the perceived safe havens. With the US fiscal position deteriorating, sovereign debt in countries like Norway and Brazil offers better risk-adjusted return potential in our view.
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Norway has no net debt, runs persistent surpluses and is backed by a $1.9trn sovereign wealth fund. Brazil, while more volatile, compensates investors with double-digit yields and a very undervalued currency — underpinned by a credible monetary authority and export revenues less tied to global trade cycles.
Across both, we see attractive yields in underappreciated currencies, offering diversification and a meaningful margin of safety.
Further down the pyramid, in industrial security, we’re focused on companies enabling the physical and digital backbone of successful modern economies. This includes both the semiconductors powering AI and connectivity, and the infrastructure firms rebuilding the systems that support them.
National security, long overlooked by markets, has re-emerged as a strategic priority. Europe has been galvanised to boost defence spending and infrastructure investment in response to growing geopolitical risks and a requirement to reduce reliance on the US.
In our view, this reordering of national priorities marks a structural reset, not a passing phase
We began building exposure to defence stocks five to six years ago, when they were deeply out of favour — a move that has since paid off. While we’ve trimmed most of our holdings after strong gains, we continue to own a number of high-quality aerospace and defence contractors, which we believe are well placed to benefit from a prolonged period of increased investment.
As governments confront the hard realities of national resilience, defence may have led the way, but energy is proving just as urgent. Investor sentiment has shifted from a strong focus on renewables toward a broader appreciation for what’s practical and scalable. That shift is still underway, presenting underappreciated and mispriced opportunities with plenty of runway.
In our view, this reordering of national priorities marks a structural reset, not a passing phase. As capital flows back to the foundations of each nation’s needs, we endeavour to skate to where the puck is going, not where it is now — seeking opportunities where solid fundamentals and resilient demand drivers are paired with compelling valuations.
Alec Cutler is manager of the Orbis Global Balanced and Cautious funds
