You’ll Never Believe How the Stock Market Reacts to Military Conflicts.

As disturbing as the threat of nuclear war may be, history suggests that stock market reactions to similar events have been short-lived. Stocks tended to react negatively during the period the military conflicts occurred. However, afterward, stocks have shaken off the conflict, and it is a truth about investing people should know.

Here are five data points you need to know:

1. The stock market is amoral when it comes to military conflicts. As human beings, we think with our hearts and emotions. The markets, on the other hand, care very little about significant tragedies that occur on a long-term basis.
2. Besides the initial shock during the chaos of the event occurring the Dow Jones Industrial is only down on average 5.9%. The standard expectation is that the markets would crash to bear market levels of -30%, which is entirely inaccurate.
3. One month after the military conflicts have ended the market is positive 86% of the time. Markets are very resilient and have historically snapped back positive very quickly.
4. The markets have a very short memory and have an average return of 17% 1-year after the conflict has ended. Once an event is over the stock market, begins to prioritize future data and that is what drives the market going forward.
5. Market crashes can cause severe damage to your portfolio and take years to recover. However, it takes 113 days on average to recover from a major military conflict. Not the outcome you would expect from such events.

Chart Source: LPL Financial, 01/28/2018

Past performance is no guarantee of future results.

S&P 500 Index is an unmanaged group of securities considered to be representative of the stock market in general. You cannot directly invest in the index. The opinions expressed in this commentary are those of the author and may not necessarily reflect those held by Kestra IS or Kestra AS. The material is for informational purposes only. It represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. It is not guaranteed by Kestra IS or Kestra AS for accuracy, does not purport to be complete and is not intended to be used as a primary basis for investment decisions. It should also not be construed as advice meeting the particular investment needs of any investor. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security.Securities offered through Kestra Investment Services, LLC (Kestra IS), member FINRA/SIPC. Investment advisory services offered through Kestra Advisory Services, LLC (Kestra AS), an affiliate of Kestra IS. Fusion Wealth Management is not affiliated with Kestra IS or Kestra AS.