How much does terrorism affect my investments?
Posted by admin on 17 May 2008 8:51 am. Filed under Investing.
GRANT. Y asked:
I know its somthing that we dont want to happen but it does and will. How will my investments be if somthing happens. I am unaware how 9/11 affected it. Or worse somthing horrible happens and wallstreet is attacked. I know there will be more problems then just my money but what if? For now i have full faith in our govt. but alot can change in 20 30 years. hopefully for the good.
part 2
How does the current war affect investments?
If 2008 brings a new approch and pulls out of iraq. how would that affect investments?
I know its somthing that we dont want to happen but it does and will. How will my investments be if somthing happens. I am unaware how 9/11 affected it. Or worse somthing horrible happens and wallstreet is attacked. I know there will be more problems then just my money but what if? For now i have full faith in our govt. but alot can change in 20 30 years. hopefully for the good.
part 2
How does the current war affect investments?
If 2008 brings a new approch and pulls out of iraq. how would that affect investments?
On May 17th, 2008 at 11:26 pm
Could you be more scared?
On May 20th, 2008 at 1:10 am
You know that’s really like 5 questions but what the hell.
Let me put the whole thing to you simply though: as long as none of the companies you’re invested in go bankrupt if you keep your money invested for long enough (5-30 years) chances are good that inflation will eventually bring about a return on your investments (this is the basic idea behind a non-controlling interest investment which most people have lost sight of in the midst of hot button issues).
As to 9/11 it was like any other stock market crash: a lot of companies went bankrupt, a lot of people paniced and cashed their stock out (as though having cash would make a difference if the economy was destroyed), and a handful of people bought piles and piles of stock for cheap. The former group suffered huge losses and the latter reaped huge profits. Note that the latter group only succeeded if they carefully considered all their options and that this is not advice to just buy as much cheap stock as you can whenever you can.
As to the effects of the war on investments… The economy is bad and a lot of non-essential companies have had difficulties as a result. A variety of industries have benefited greatly; namely the oil, entertainment (when times are tough people stay home and watch tv), and millitary ones. Any company that has a defense contract has been succesful as well (thus the increase in the budget deficit). Look for those companies to lose value around the time of the next administration change. Assuming that the United States isn’t destroyed under the weight of it’s debts look for the oil and millitary industries in general to continue to grow exponentially as there is no indication that conflicts will cease any time soon.
My personal reccomendation is to focus investments on British, Scandinavian, Saudi Arabian, and certain South American (only the stable countries) companies and certain futures markets (precious metals, oil, etc.) and to avoid investing in anything Israeli, Iranian, Korean, Chinese, Russian, Taiwanese, or Indian.
On May 21st, 2008 at 8:20 pm
I suggest you to research the Tokyo Stock Exchange before and after the United States of America killed hundreds of thousands of people with two Atomic Bombs.
On May 23rd, 2008 at 7:10 am
How much does terrorism affect investments?
It does affect investments in a major way.
The war on terror started after 9/11 when terrorists destroyed the WTC towers in NYC. What impact did this have on America’s economy? Well, first of all, the US dollar began a steady decline after the terrorist attacks. The attacks have sparked inflation.
After September 11, America should have reacted sooner, I think. There should have been some sort of firm retaliation right after 9/11 in order to fuel faith in investors and save the economy from the crash of 2002. Unfortunately, the stock market did crash in late 2002. From a technical view point, this created a lot of damage: The New York Average broke an important trendline. See the chart:
Terrorists blowing up buses here and there and killing innocent people and destroying buildings throughout the world does not affect the economy as much as losing the war on terror would affect the economy. Losing the war on terror means investors would lose confidence in America’s strength and ability to defend herself.
America is a very wealthy nation, so it has a lot to lose. Countries like N Korea have almost nothing to lose. So America is more vulnerable in some sense.
If America pulls out of Iraq without invading another muslim country, then the muslims will say, “The Americans gave up. See? We won! It’s true! We’re gonna take over the world!” The question is how investors will view this event. Are they going to dump the dollar and lose confidence, or are these events already factored into today’s prices? I don’t know.
Government spending usually helps the stock market. When the country is fighting a war, the government spends a lot more. This extra spending translates to higher earnings, and the good numbers eventually show up on the charts. Nowadays government spending propels the stock market more than anything else. So, I think the stock market is likely to go down when the war stops and all the troops come back from Iraq.
This is a 100-year historical chart of the American stock market index (Dow):
If you look at this chart, you’ll see that each long bull market period was followed by times of “rest” when the stock market was flat. It seems to me that we are now at the beginning of one of these long rest areas.