What happens to the stock market during a time of war?
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- Опубліковано 7 лют 2025
- 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:
fortune.com/20...
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I guess this video got more importance right now
No kizzy
The elephant in the room that you guys forgot to mention is that war is big business for US defense contractors. Every missile that gets fired off is like $1 million (of taxpayer money) in the pocket of Raytheon or BAE Systems. I feel like the war economy angle can do a lot to explain why the stock market gains during conflicts.
Brad While I don’t doubt that it does have an effect, what percentage of these indices are given to these defense contractors? I’m thinking cumulatively 5%?
@@francescoalberga7627 Fair enough, but I think it probably goes further than that. More revenue for defense contractors means more jobs and more money circulating through the economy (defense purchases are essentially a form of government stimulus to domestic high-tech industry). Also, fighting a war requires fuel for vehicles and planes, which can stimulate US fossil fuel production.
@@ericstollery1 Shitty way to stimulate the economy
Consider your 'home-country' bias here. If your country wins, things can be fine. But, war is terrible if you're on the other side, e.g. the stock markets of Japan and Germany during WWII. The Russian stock market closed for generations after WWI.
I like these "perspective" pieces. They are much better than the pundits on TV.
Watching this on October, 2023 in a time of Mideast conflict 😮still relevant
The war definitely can have a negative or positive impact on stocks, oil/commodities, bonds, and the housing market, my concern is to be on a safe side. I'd appreciate useful tips on best possible ways or areas to invest now for both short and long term growth.
What happens in defence stocks during such crisis? because WW3 may start anytime now.
This is my theory:-
The army's would buy the war products in massive quantities in order to fight the war. This would in turn lead the defence manufacturers to have a massive revenue spike which in turn would attract investors. They will be what Tesla is right now. A lot of people will invest in them(considering if they have disposable/extra income in hand) and that would drive the valuations to be crazy high. Maybe they might form into an asset bubble where the people don't stop investing because they know the dependence of the government on these companies. Maybe only a hand full of them will be the major beneficiaries but the overall defence stock will increase. Then when the war starts to end, the revenues of these companies would slow down and that in turn would lead to a massive selloff by the investors. This would tank the stock prices and may lead to a market crash.
THIS IS ONE OF MY THEORY WHICH I WROTE ON TOP OF MY HEAD. But in my opinion there will be major factors like the initial approach of the government in the acquisition of these products and the overall health of the economy at the start of the war that will determine the stock market trend.
@@ishaankhandelwal7059 Hi Ishaan.. I have a general question.. If third world war broke out in the upcoming years, Will stock market continue to run during third world war time as well ? Do you have any idea about the stock market whether it will continue to function at the third world war time or not ? Pls share your view
@@MrPetchiram In my opinion the stock market would never stop even for war until and unless there is nuking and stuff (that's obvious). If you look historically the stock market didn't stop in world war 2, it just crashed so i don't think so it would have any reason to stop it's functioning. Moreover even if it does stop grey markets would start to become popular for food supplies and other essentials which in turn you can say is another market itself.
@@ishaankhandelwal7059 Thanks for your reply.
@@MrPetchiram np brother!!
Hi.. I have a general question.. If third world war broke out in the upcoming years, Will stock market continue to run during third world war time as well ? Do you have any idea about the stock market whether it will continue to function at the third world war time or not ? Pls share
All stop. All activity will be private equities. If stock market is still open all will fall down except military stocks.
Watching this in 2022
😅 Looks like we all had the same idea.
Great content with relevance today.
Hmmm - Ben must be related to John Terry (Chelsea FC legend! ).
In UK was different...
In US stock market was different because no one could reach here but this time will be different I think
We are way more global now so I think we will definitely feel waves of this. I just hope if we just sit
Still and DCA it will be all a blip in 5-10 years once all this blows over
What do you mean?
I wonder what happens to oil stocks during war time. I think although supply will be high but no one is actually gonna buy any intangible assets?
Many people feel energy and gold will be up. I do long term play etf, those will capture the whole market anyway. VTI, VOO, DEA and PDI, VYM are decent
To say that the market went up by 80% the year of the war, as if war were actually good for the economy, means forgetting that people don't take percentages to the bank, but money! If your stocks or house were worth $100.000 before the war and after the war they were worth $5000 and after the war, their value increased by 80% in a year, your stock or house would still be worth $9000...
What about civil war?
Great video!!! Keep on growing!
Good stuff. Thanks!
What about a civil war within America?
That's the big question now. The US dollar is traded globally, if civil war breaks out surely this will be a nose dive in the US market.
Hopefully we will put that aside for now since they are focusing the propaganda now on fighting this common enemy. But we will see. This all feels orchestrated and China will make their move next maybe.
Since we are living in the fourth turning of this generation, we are repeating the cycles. I am surprised it is happening as they said. Look up fourth turning and see what you think
All my portfolio is in Tesla stock. Will this effect Tesla?
I just seen this and its hard to say since tesla isnt dependent on the oil from the middle east since it is a electric car company. So it may be the safe car stock right now but could still see fluctuation cause people will be fearful. If i were you i would diversify and maybe put some into defense stocks or gold maybe!
@@OnlyTheTipDaddy yup, i was thinking the same thing. No I am Tesla 100 percent all the way!
@@robertsmith6408 lol I dont blame you, it looks to be at a really good buy zone too and when production ramps up and everyone is force to drive electric cars, they will rocket I believe! Good luck to you my brother, wishing you lots of gains from it 🙏
Vanguard Museum locked 🇧🇸
Nice headphones Josh!
Came back to this
A war will tumble the market and all indexes will assume the bearish trend. It is sad. My adviser proferred that I liquidated some shares in my portfolio that aren't doing well enough and buy more digital currency with, this was before the new year. Thanks to her I have over $350,000 in my portfolio. It was just above $300,000 at the beginning of the year.
makes sense, bitcoin and other cryptos rose at the beginning of the year, I guess business moguls were selling their shares and investing in bitcoin.
yes Philip she mentions to me that a lot of people asked to start up with her in the new year, most of which are referrals from her associates and clients and want to invest in bitcoin.
@@raheemkumar2556 hello who is your adviser and how can one reach her? I have heard of female financial advisers just haven't encountered one
there are definitely female financial advisors Hayes.
interesting Raheem, I would like to get some advice too on how I can properly manage my finances.
@@hayesgibson2074 her name is Emily R Baker works with Goldman Sachs Bank, she has a website in her name emilyrebeccabaker. com where she handles investing with clients, she is also on linkedin if you are on that social platform
i mean some of us could shift to war profiteering during war times, manufacturing and gun running.
It recovers if you win......
Feb 2024......for all you late bloomers and early doomers ya boy RICHIE is here to say, AI will save the day
How can Ben have better clothes than Batnick who lives in NYC?
lol
the bitcoin joke hitting a nerve as Russia starts bombing Ukraine tonight and it crashed immediately
Overall it doesn’t
The weapon stocks go up and up
This will be useful for China Taiwan in August
😂😂😂😂
Explain war and the stock market within context of Russia and Ukraine tensions now and NATO countries involvement. 🤔
I think a war isn't going to happen, but should it happen, it'll be terrible for everyone except defense contractors in the short term (1-2 years) When bubble forms in those stocks (Lockheed Martin, BAE, General Dynamics, etc) it'll be probably the time to sell and get back into regular stocks. At any given time consumer staples should also do well.
@@IamRohitKGupta awesome! Sounds like you are all ready with a plan
You need to let the investment advise talk ,,,, NOT you.