The 'Four Horsemen' actually ride bulls

The stock market always seems to stay strong (or even rally) in the face of war, famine, pestilence and death.

By Louis Navellier Mar 10, 2010 3:06PM

Louis Navellier top stocksOn Friday, I wrote here about my top Chilean stocks that were unshaken by the earthquake. These companies clearly show the opportunity in this Latin American country even as it digs out of the rubble from a severe 8.8-magnitude earthquake.

 

I’ve been looking at a lot of data recently regarding the stock market in the wake of massive earthquakes in Chile and Haiti, and I started to wonder if it’s common for Wall Street to stay so cool in the face of severe disasters. After some research, I was surprised that the answer is a resounding “yes!” Let me show you with several brutal events that failed to shake the market:

 

September 1939: After Hitler launched World War II by invading Poland on Sept. 1, 1939, the market unexpectedly soared, rising 16.85% on the month.

 

Nov. 25-29, 1963: President Kennedy was shot and killed in Dallas on Nov. 23. The market rose 5% the week after.

 

Jan. 29, 1986: A day after the Challenger’s launch disaster, the market ticked up modestly and then rose two out of the next three days.

 

Nov. 1, 2001: Just 19 days after Sept. 11, the Dow reclaimed its previous level of 9,600 and continued to rally well into spring 2002.

 

Or put another way, the biblical Four Horsemen appear to be riding bulls! (Read a full listing of instances of the markets' resilience in the face of War, Pestilence, Famine and Death.)


There are a number of theories as to why horrific events fail to grab investors’ attention. The first, which I don’t put any stock in, is that “broken windows” create jobs. The theory is that as events like war or disaster destroy things, the companies that build and repair those items find new opportunities. Several economists debunked this myth, since it’s basically a shell game where gain or loss is dependent on the merchant. It’s not shared success for all.


I lean towards the theory that the market loves to focus on financials, and that as long as banks are fine then all of Wall Street will be fine … but it’s much more complicated than that, of course. It’s always hard to isolate the psychological factors of investing and how they work on normal days, let alone during a crisis.


For whatever reason you choose, there is some cold comfort in knowing that no matter how tragic the world's events may seem, the market is one thing we don't need to worry about when sudden tragedy strikes. And, if you're in a trading mood, it might be a good strategy to buy after the market's first knee-jerk drop.


Related Articles:

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

114
114 rated 1
278
278 rated 2
474
474 rated 3
641
641 rated 4
639
639 rated 5
663
663 rated 6
640
640 rated 7
499
499 rated 8
284
284 rated 9
122
122 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
COPCONOCOPHILLIPS9
TAT&T Inc9
VZVERIZON COMMUNICATIONS9
KOGKODIAK OIL & GAS Corp9
CVXCHEVRON CORPORATION8
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.