Stock markets recover more quickly after international conflict and crises than from economic proble...
Stock markets recover more quickly after international conflict and crises than from economic problems, according to research by Chase de Vere.
The Dow Jones Industrial Average fell 4.3% in the weeks between the United Nation's 1991 ultimatum to Iraq and its deadline for Iraqi withdrawal from Kuwait, but climbed 20% in the two months following the deadline passing.
Similarly, the Dow Jones sank by 12% in the month following North Korea's invasion of South Korea in 1950 only to rise by 20% in the next three months.
This rapid recovery effect is not confined to the US, as demonstrated by the effect of 1987's Black Monday on the FTSE 100. The index fell 31% in the 12 days post-Black Monday, only to climb back up 46% in the succeeding 20 months.
Nikki Foster, savings and investments manager at Chase de Vere, stressed investor concerns about the current Iraq situation should not deter them from investing.
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