With regards to the above comments about war and the resultant sharemarket movements; I read a couple of interesting articles in the last few days which may be of interest.
The first by Annette Sampson entitled "History doesn't always repeat" also had a great little quote from Warren Buffet where he said:
"If past history was all there was to the game, the richest people would be librarians." Love it....
The article/s were commenting on research that Russell Investment Management had done where they looked at some past crises and their effect on the US sharemarket.
The Russell research looked at a long list of 'crises' such as the Fall of France, Pearl Harbour, Korean War, Cuban Missile Crisis, US bombing of Cambodia, USSR in Afghanistan, Iraq invasion of Kuwait, Start of Gulf War, September 11 etc and then how the markets moved immediately after......then 25 days later......65 days later......125 days later and 250 days later.
Extracts from the article:
"History clearly shows a pattern where investors take flight at the initial news of trouble, but the sharemarkets don't take long to rebound.
In some cases the initial falls take a couple of months to work their way through the system; in others the fall happens in a matter of days.
And in some cases the market can go through a period of volatility at the bottom before recovering. But the message from history is that markets do rebound, and when they do the moves can be both sudden and dramatic.
On average, the crises caused the US market to fall by 7.7 per cent and, 25 days later, it had regained half its losses. After 65 days, on average, the market was only fractionally behind its pre-crisis point and it had made substantial gains after 125 days.
[Note: A second article I read put the average Australian Market fall at 4.2 per cent compared with the US figure of 7.7 per cent....]
"Perhaps more pertinently, the firing of the first missiles in the Gulf War was actually greeted as good news by financial markets as it ended months of uncertainty. The market rose 3.7 per cent in the initial days and was 11.5 per cent higher after just 25 days.
Russel Investment Management managing director Alan Schoenheimer also points out that there are differences between this crisis and those in the history books.
This is the first time for example, that the bursting of a sharemarket bubble has so closely preceded the outbreak of war.
The bottom line is that trying to predict what will happen on investment markets over the coming months is a mug's game. No one knows.
History tells us that the sharemarket will eventually rebound, but as Buffett's words indicate, that's only part of the equation.
It doesn't tell us how long we'll have to wait, whether the market has further to fall, or whether the rebound will be followed by further falls.
'Using guesswork to determine investment decisions is never a good idea' says Schoenheimer"
A little further food for thought...........
