Investor Points of Few – Taking Stock in a Crisis…

By Alan Steel

The crises? The conflicts? Trump’s verbal battles with North Kim-rea?

These things are alleged to make mincemeat of stock markets.

But do they really set the economic hares running and plummet values?

Folks still scared and scarred from 2008/09 are quick to close the shutters when the tough talk starts, and then batten down their investment hatches by running to bonds, gold and cash. 

Consensus thinking suggests that’s the smart thing to do. 

But is it? 

In fact, even when the world just sounds like it might implode from allegations of overvalued stock markets, inflation-repellent economies, and lurking Brexi-mations and Trump-lications, the herd eagerly shifts its collective hoofs to “run.”

Hmmm…

Well, the facts are funny old things, historically speaking.

And for those who think conflicts are bad news for stock markets, evidence from renowned global research firm Ned Davis suggests otherwise.

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They’ve tracked over 40 crises that have affected world stock markets since the outbreak of World War 1.

What they found is that typically, stock markets fall immediately by as much as 3% or 4% when a crisis occurs.

But the good news soon follows.

The average increase four months hence is about 9.2%.

And six months later it’s up 16.9%.

Don’t ask me why, but that’s what happened.

So think twice the next time you’re considering your investments during a crisis.

You may want to take stock…

Alan Steel, Chairman, Alan Steel Asset Management

 

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