Stocks and War

Chart of the Week for September 13-19, 2002

As we remember the events of last September, the latest signals from Washington imply an increasing chance of war with Iraq. Investors stung by losses following the 9/11 terrorist attacks may view the possible market impact with some trepidation. However, such events often have weighed on stocks only temporarily before rebounding. Historically, following crisis events, stocks tend to decline initially, but recover once investors have had a chance to evaluate the situation. Misdeeds by domestic corporate managers may have done more to depress stock prices because they more directly affect company prospects. A well-diversified portfolio and a steady head are among an investor’s best strategies if today’s rhetoric should escalate into tomorrow’s conflict.

This illustration was compiled using information provided by Ned Davis Research, Inc. (NDR), an organization that provides timely global investment research and consulting services to institutional money managers. NDR is not affiliated with ICMA-RC.

The Dow Jones Industrial Average (“DJIA”) is a price-weighted average of 30 actively traded highly capitalized “blue chip”t; stocks which is prepared and published by the Dow Jones & Company. You cannot invest directly in the DJIA; therefore, its performance does not reflect the expenses associated with the active management of a portfolio of open-ended investment company shares.