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War Time Stock Market Conditions

It is common knowledge that wars affect markets. They exert influence on every decision made whether to invest or not, every portfolio or even every retirement plan. Still, most financial advisors' opinions on whether investing during war times is a good idea differ. This article provides explanations of the various investment conditions during several wars known from the history.

The provided analysis is based on information of the S&P 500 representative of the US stock market. Details on the monthly returns and military statistics are provided in order to facilitate your investment decisions in times of war.

The history of the stock market illustrates the volatility and dynamics of the market. Nevertheless, past examples are the only source of reference and exemplification we can use in order to make sound investment decisions. 

Now, let's take a look on the various wars experienced throughout the years.

World War II

The World War II lasted from 1939 to 1945. During this period, the S&P 500 was 12.1% per year. The World War II included 8 of the worst US stock market crashes experienced in the US history.

WW II Statistics

The stock market returns totaled 98.08%, whereas the annualized return was 12.1%. The number of service members was 16 million worldwide. The number of deaths that were given during the war is approximately 300,000. There are around 5,400,000 veterans from the war alive.

The Korean War

The Korean War lasted from 1950 to 1953. During this period, the S&P 500 was 18.9% per year. The Korean War is famous for its highest market return as compared to the other wars under consideration.

Korean War Statistics

The stock market returns totaled 70.33%, whereas the annualized return was 18.85%. The number of service members was 5.7 million worldwide. The number of deaths that were given during the war is approximately 33,700. There are around 3,900,000 veterans from the war alive.

The Vietnam War

The Vietnam War lasted from 1964 to 1975. During this period, the S&P was 3.91% per year. This is the other extreme regarding market returns, since they were the lowest as compared to the other wars examined.

Vietnam War Statistics

The stock market returns totaled 51.00%, whereas the annualized return was 3.91%. The number of service members was 9.2 million worldwide. The number of deaths that were given during the war is approximately 47,400. There are around 8,300,000 veterans from the war alive.

The Desert Storm Gulf War

The Desert Storm Gulf War lasted from 1990 to 1991. During this period, the S&P was 9.52% per year. Even though, this level of the S&P 500 is satisfactory, the eventual recession led to many financial losses in 1992.

Desert Storm Gulf War Statistics

The stock market returns totaled 5.45%, whereas the annualized return was 9.52%. The number of service members was 2.3 million worldwide. The number of deaths that were given during the war is approximately 148. There are around 1,750,000 veterans from the war alive.

The War on Terrorism

The war on terrorism started in 2001 as a result of the 9/11 events and still continues. The S&P 500 indicator for the period October 2001 and December 2002 was -12.2% per year. As we mentioned the war still continues and as a result the negative percentage of the S&P 500 is subject to change. The war on terrorism includes peoples from around the world, which distinguishes it as one of a kind.

War on Terrorism Statistics

The total stock market return for the year 2002 was -11.18 and the annualized return amounts to -13.78. Statistics on the number of casualties is not provided since the war still continues.

The War in Iraq

A continuing common trend regarding the reruns cannot be determined yet. A negative trend has been observed during the three years prior to the war. Some economic experts even estimate the losses of the US stock market before the war in Iraq even started at one trillion dollars. On the other hand the long term final results are yet to be seen.

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