Was anybody here trading in 2003?
It was the year we invaded Iraq (regrettably). The markets were expecting a decisive victory. During the days and weeks when American troops advanced on Baghdad, the market climbed. As they entered Baghdad and marched on the center of the city, the market traded higher and higher.
Finally, American troops fastened a rope around the neck of Saddam Hussein’s statue and attached the other end to a tank. The world watched on television as the tank backed down and toppled the statue.
And at that very moment – stocks started to fall.
The rumor was that the US would win the war quickly and decisively. The fact or news was that the war itself turned out to be the simplest part – and the 14 years since have been anything but.1
Can you see the parallels with today?
Stage 1: The prospect of war/a Trump presidency is scary: stocks go down.
Stage 2: Once war/the Trump presidency commences, people see the positive aspects of it.
This post was published at Mauldin Economics on JANUARY 12, 2017.
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