What happens to the stock market during a time of war? (with Josh and Ben)

The Compound and Friends

Josh Brown

Investing, Business News, News, Business

4.7 • 2.2K Ratings

🗓️ 8 January 2020

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

The recent flare-up in the Middle East has investors asking questions about what might happen to their portfolios if a war breaks out. While every scenario is different and the variables change, there are some important things to understand about how wars have historically affected the Dow Jones Industrial Average. Ben Carlson is the Director of Institutional Asset Management at Ritholtz Wealth Management. This past week, he took a look at how US stocks have acted during WWI, WWII, the Korean War, Vietnam, the Gulf War, etc. Ben shares his findings in a new article at Fortune Magazine and in this video with Josh Brown. Read Ben's full article here: https://fortune.com/2020/01/03/iran-us-conflict-stock-market-oil-prices/ 1-click play or subscribe on your favorite podcast app Subscribe to the mini podcast on iTunes or Spotify Enable our Alexa skill here - "Alexa, play the Compound show!" Talk to us about your portfolio or financial plan here: http://ritholtzwealth.com/ Obviously nothing on this channel should be considered as personalized financial advice just for you or a solicitation to buy or sell any securities. Please see this 3,000 word terms & conditions disclaimer: https://thereformedbroker.com/terms-and-conditions/ Hosted on Acast. See acast.com/privacy for more information. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	It's the question on everyone's mind this week. What will happen to my portfolio if a war breaks out?
0:07.0	Recent news out of the Middle East, obviously no one is very excited about what we're seeing and hearing.
0:12.0	I have Ben Carlson with me. Ben is the
0:14.4	head of institutional asset management at Ritholz Wealth Management, sits on our
0:18.4	investment committee. He wrote a fantastic piece at Fortune about surprising stock market returns during wartime.
0:26.8	We're going to get into it with Ben in just a moment.
0:28.6	Stick around.
0:29.6	Okay, first of all, greetings from New York, Ben. How are you?
0:33.0	Everything's good here in Michigan.
0:35.0	All right. I loved your article. I thought you struck the right balance between, okay, yeah, it's not great. We're not rooting for a war. However, stocks have actually done better than most people would expect during some of the most violent and long-ranging conflicts that America has ever seen that's pretty much
0:58.0	what what you found in the data right? The stock market hates uncertainty and
1:01.5	there's nothing more uncertain than time of war.
1:05.0	But I went back and looked all the way back to World War I
1:07.2	and World War II, the Korean War, Vietnam.
1:09.9	And World War I initially saw the Dow fall like 30%, six months after the war,
1:14.0	started in 1914.
1:15.0	But then the stock market closed for six months,
1:18.0	which is the longest that's ever happened before.
1:20.0	Which I can't even...
1:21.0	And it's never happened since.
1:22.0	No, I can't imagine that happening today
1:23.7	the stock market just closing because basically liquidity dried up and everyone went away
	...

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