I think I threw you for a loop last week when I said this:
This new convergence of War Cycles will also coincide with the last stock market boom of our lifetimes — a boom that too many ordinary investors will miss out on due to bad advice and even blind panic.
When wars break out, investors’ natural response is to run from stocks like cats on hot blacktop … right before life-changing gains could have been made.
The only people who end up profiting are professional financiers. Men like Joe Kennedy, who made several fortunes during World War II.
Let me give you some concrete examples so you can see what I’m talking about …
Take the Iraq War …
Between March 20, 2003, when the U.S. launched a “surprise” attack against Iraqi forces, and Dec. 18, 2011, when the U.S. combat mission in Iraq formally ended, the Dow Jones Industrial Average rose from 8,286.60 to 11,866.39.
That’s a gain of 90.76%, even taking the 2008 stock market crash into account.
Or look at Vietnam …
It lasted 11 years, cost an estimated $686 billion and killed 58,000 American soldiers and up to 1.2 million North and South Vietnamese.
In many respects, it was a complete disaster. So how did the U.S. stock market respond? Mostly by going up!
Between mid-1963, when 11,000 American military personnel were first sent to South Vietnam and January 1973, when the ceasefire agreement was signed in Paris … the Dow Jones Industrial Average gained 53.9%.
While this may not seem spectacular, it was far better than the three years before U.S. troops were sent, when the Dow actually lost 5%.
And despite what many expected, the end of the war did little for stocks:
Following the signing of the Paris Peace Accords on January 27, 1973, the Dow plummeted to a low of 577.60 in 1975 — a loss of 42.5% in just two and a half years.
Then there was Korea — a bloody conflict that lasted only three years but cost 33,000 American combat deaths.
Investors who thought the Korean War would hurt their investments missed out on some solid gains … the S&P 500 gained 25%.
You might argue that the Korean, Vietnam and Iraq wars were relatively small conflicts.
What about the really big wars? Surely they must make the markets take a nosedive, right?
Strangely enough, that’s not what happened during World War II.
On Dec. 8, 1941 — the day after Japan bombed Pearl Harbor — the Dow closed at 112.52. By V-J Day on Aug. 14, 1945, it had risen to 164.79 — a gain of 46.43% in just three and a half years.
That’s a little better than 10% a year … during the most violent military conflict in history!
And how about World War I? More than 16 million people were tragically lost … but the Dow nearly doubled.
Now, let me make one thing perfectly clear: I’m not saying war is good for business … or good for America. Far from it.
The stock market is hardly the only thing that matters in an economy. Wars are horribly destructive economically, even for the victors.
But the point I’m trying to make is this:
Foreign wars have not historically caused a stock market crash in the U. S., as some analysts claim.
In fact, just the opposite is true.
We’re now in an era in which people are at war with their own governments — and in which governments launch attacks on other countries to distract their populations from the misery their policies inevitably cause.
Tens of millions of Americans will flee the stock market when the next war comes, falsely believing the stock market will implode.
The truth, however, is that the market will go into overdrive … and the savvy few who prepare now will make a fortune.
Many people forget that the U.S. stock market was plummeting in the weeks before Sept. 11, 2001.
The exchanges were closed for 10 days following the attacks … but when they reopened, the U.S. markets did a moon shot. The Dow skyrocketed from 8,235 to 10,632 on March 12, 2002 — a gain of 29.1% in just five months!
The same thing is going to happen over the next few months and years. Major military conflicts will trigger temporary selloffs as small investors flee stocks.
But institutional money will flood in … triggering a massive rally.
When war cycles are rising and revolutions are in the air, markets are often turned inside out and upside down …
… leaving most investors either frozen on the sidelines or caught on the wrong side of the markets, watching their retirement dreams go up in a puff of smoke.
In the weeks ahead, you’ll see astounding moves in many markets — moves that defy all logic. And you must reject everything you thought you knew about economies and investing.
My colleague Larry Edelson — when asked how he was preparing for this new era of wars, revolutions and government crackdowns — told them the best defense was “making money, and lots of it.”
And I’m helping my Wealth Megatrends subscribers do just that.
And so is Dr. Martin Weiss — founder and chairman of Weiss Ratings.
In fact, he just released an emergency video unveiling a NEW way to generate weekly income of $1,000 or much more every single Friday.
All the best,
Sean
