investing

Investors, Look Past Global Tensions

The average time it has taken for stocks to bottom is 22 days, with the market recovering all losses in an average of 47 days.

With tensions again escalating in the Middle East, investors should remain calm and stick to their long-range investing plan. According to investment research firm CFRA, since World War II, the average market loss after military or terrorist shocks has been just 5%, measured by prices for Standard & Poor’s 500-stock index. The average time it has taken for stocks to bottom is 22 days, with the market recovering all losses in an average of 47 days. The biggest hit came from the attack on Pearl Harbor in 1941, when stocks lost 19.8% and took 307 days to recover. Iraq’s invasion of Kuwait in 1990 triggered a 16.9% drop, recouped in 189 days. More recently, in 2017, North Korean missile threats shaved 1.5% off stock prices; the loss was erased in 36 days.

As for worries about spiking oil prices, these days, with increased U.S. crude production, violence in the Persian Gulf region isn’t likely to result in shortages. Nor are oil prices likely to climb high enough to seriously damage the U.S. economy. Expect gold prices to jump when the headlines get scary, but fight the urge to speculate: Gold has rallied sharply already over the past year. In general, a small amount of gold can make sense, via an exchange-traded fund such as iShares Gold Trust (symbol IAU), as a portfolio diversifier, inflation hedge and insurance against catastrophe.

Most Popular

9 Great Growth ETFs for 2022 and Beyond
ETFs

9 Great Growth ETFs for 2022 and Beyond

These growth ETFs offer exposure to higher-risk, higher-reward stocks while lessening the risk of a single stock torpedoing your returns.
January 18, 2022
The 10 Best Closed-End Funds (CEFs) for 2022
CEFs

The 10 Best Closed-End Funds (CEFs) for 2022

These high-yielding CEFs won't just significantly boost your portfolio income. They'll also allow you to buy their underlying stocks and bonds at a di…
January 12, 2022
Sweet Silicon: 5 Superb Semiconductor Stocks for 2022
stocks

Sweet Silicon: 5 Superb Semiconductor Stocks for 2022

If 2021 was a good year for the chip industry, 2022 could be downright great. Here are five semiconductor stocks if you're seeking out growth.
January 11, 2022

Recommended

Could the Stock Market Crash for Real? Here’s How to Prepare
investing

Could the Stock Market Crash for Real? Here’s How to Prepare

After a long march to record heights, the stock market tripped into correction territory in January. How should you react? Thoughtfully.
January 25, 2022
The 60/40 Portfolio Is Dead. Long Live 33/33/33.
investing

The 60/40 Portfolio Is Dead. Long Live 33/33/33.

A portfolio of stocks and bonds used to be the gold standard, but it just doesn’t cut it anymore. It’s time to throw some alternative investments into…
January 25, 2022
8 Facts You Need to Know About Stock Market Corrections
Markets

8 Facts You Need to Know About Stock Market Corrections

Scary as they are, drawdowns are a normal part of the investing process. Having a financial plan in place and sticking to it is every investor's best …
January 23, 2022
Is the Stock Market Closed on MLK Day?
Markets

Is the Stock Market Closed on MLK Day?

Both the stock markets and bond markets will have Monday off as the nation honors civil rights leader Martin Luther King Jr.
January 15, 2022