2/25/22 On War and the Stock Market … What History Tells Us

News:

Ukrainian casualties have exceeded 450 with 137 deaths as Russia’s invasion enters its second day.

Photograph by Kirill Kudryavtsev/AFP

Resistance from the Ukrainian military appears to be having little effect as the Capital Kyiv/Kiev could fall to Putin in the next few hours.

The markets reacted strongly yesterday. After opening deep in the red they closed deep in the green. The reversal may have signaled a market bottom as markets often do bottom on expected news.

The market had been pricing in the invasion for weeks now. I’ll review the historical results of war on the market in the TIMING section…

Technicals:

Markets are near oversold. The put-to-call ratio remains oversold even after yesterday’s rally.

I still believe what I said yesterday:

If you want to get in a stock at discount rates, this is a buying opportunity. Just be prepared to hold for several months … or a year.

I’m not convinced nor am I unconvinced the bottom is in. War is unpredictable…

Timing:

In 2003 after the U.S invaded Iraq the SPY was up nearly 14% three months later.

After Russia’s 2014 annexation of Crimea, the SPY was up about 2.5% three months later.

The longer the outlook the better it looks for the market. Over the past 45+ years, the average one-year return for the SPY after a major conflict began is about 20%

This is a great time to buy the in my opinion. Just as long as you’re ready to endure the volatility that comes with the fog of war…

In 1990 after Iraq invaded Kuwait the SPY was down 12% three months in. But managed to rally, one year after the invasion the SPY was up 9% from the day the conflict started.

I bought more TSLA at $715 yesterday.

Watchlist:

*Low Float

*SGLY has resistance at $8
BPT is on watch
LXU has support at $13.40
AMLX has resistance at $30
WTTR has support at $7.75
LNTH is on watch
VIST has support at $7.35
ZETA has resistance at $12

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