Market Update | Third Quarter 2017

Stewart Mather, CFP®

MARKET SPOTLIGHT: GEOPOLITICS

The first point of concern is centered around continued drama with North Korea and the resulting escalation of tensions. This is understandably an issue, as escalation to open war would lead to the senseless loss of human life, with millions of innocent people potentially caught in the crossfire, and would likely disrupt the global economy.

Taking a practical approach, we investigated historical data to see how the stock market has performed in past times of turmoil in an effort to try and set expectations for future periods of crisis. Referencing the table on the right from Strategas Research Partners, one can see that during the day of a major geopolitical event, oftentimes the return of the stock market was negative, followed by a period of weakness for at least the month following. Looking out a year, however, markets have tended to recover and even advance further. The diverse paths that market returns have taken show just how difficult it is to time the market.

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