Just How Does the Stock Market Perform During War?

There has been a lot going on over the past couple years, from Covid to unemployment to inflation and now to the Russian invasion of Ukraine (and the list goes on). Many investors are wondering what they should do in these turbulent times over seas, but history shows that by and large, market drawdowns tend to recover relatively quickly (and probably faster than people tend to fear, historically speaking.) During WWII, the Dow was actually up over 50% from 1939 until the war ended in 1945, so there is no definite prognostication for these types of conflicts, either.

Generally speaking, the more uncertainty in the conflict, the more volatility in the markets. With the ties to oil production in Russia, this could cause pricing effects all the way through the supply chain and have a very wide reach. The key to remember is that when you decide to time the market, you are faced with the incredibly difficult task of timing the exit AND the re-entry. Throughout history, this has proven exceptionally difficult to get right, and lost upside can materially stall overall returns.

Market volatility is a normal part of the investing process. The Russia-Ukraine conflict has caused volatility, but in the context of history, it is best to stick to your pre-set plan because hopping in and out on fears of what could happen are more likely than not to cause more pain than upside. Consult your financial professional for more information! #peace #worldpeace #investing #wealthtipwednesday

Check out the chart from LPL Financial on drawdowns during wartimes for some more perspective...

-Your Friends at Red Oak Financial Group