Is Global Strife a Signal to Sell?

Chart of the Week: Is Global Strife a Signal to Sell?

February 28, 2022

As gut-wrenching as it is, this is not the first time in history that war has broken out in Europe. Is a major geopolitical crisis always a sell signal?

To help answer this question and provide some context, I hit the history books and marked the onset of military conflicts (or near conflicts). Then I measured the performance of the Dow Jones Industrial Average over the ensuing months. (The Dow is only 30 stocks and doesn’t include dividends, but it’s the longest-running “live” index we have.) What I found was that, on average, stocks were 7% higher six months after the start of a conflict.

It’s certainly possible stocks could decline further—nothing is guaranteed—but six months isn’t exactly a long time to be rewarded for your patience.

Source: Adviser Investments, S&P Dow Jones Indices.

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