US MILITARY INTERVENTION IN SYRIA…PANIC TIME?
The US military is edging closer to a strike against Syria. The announcement last week sent stocks lower and sent oil prices higher. Is it time to panic? What will war mean to the stock market? If you look at the history of war and the US stock market, we usually see an initial decline as during the initial announcement of military action. However, as the conflict begins to unfold, and one can quantify the scope of the action, markets tend to quickly stabilize. The pattern of an initial decline in the markets and then subsequent recovery actually held true for the 1991 conflict of Operation Desert Storm, the 2003 Iraq War, and the 2011 Libya conflict. To put things in perspective, in 1991 at the start of Operation Deseret Storm, the S&P 500 started the year at 330. The end of the year it closed at 417. We all are aware that today the S&P 500 is at 1,654. That is in spite of all the conflicts mentioned above, terror attacks on the US soil, two recessions…one of them dubbed “The Great Recession”. I guess it seems silly now to panic doesn’t it? It also seems unlikely we’ll see something significantly different solely from the possible military action that is expected to get underway soon in Syria. There will always be uncertainty in the world. We never know what might be around the corner next, but I think I can guarantee there will be something. We’ve said it before and we’ll say it again; we all need to have a plan that prepares the foreseen and unforeseen events that come in life. You also need to employ prudent portfolio management that is structured to capture global market returns while managing for present and unforeseen risks.