Last month, Taliban forces took over Kabul, the capital of Afghanistan. And now, the U.S. is completely out of the country.
I'm sure you saw the news and watched the videos of Afghans trying to flee the country. As an American, living in a stable nation, it was hard to believe... and even harder to watch.
The U.S. started pulling troops out of Afghanistan in May. And Taliban forces began taking over cities in early August. Now, the Taliban is back in control of the whole country.
This is not just an Afghanistan story, either. These events will move chess pieces in China, Russia, and on the stage of global terrorism.
I'm not getting political today. I'm not claiming a side of the aisle to grandstand about what has been done. That doesn't really matter to me right now.
Instead, I want to focus on what this means for investors... because the world is different today than it was just a few weeks ago.
The reality is that we've entered a new era of geopolitical uncertainty. And it's important to understand how markets typically respond to times of crisis... so we can take action.
Let me explain...
We can't know how this situation will play out from here... how long it will last... or what it'll mean for our other relationships in the Middle East and elsewhere in the world.
We can't know what reverberations are coming... or how impactful they will be. And we can't know exactly how what just happened will change the geopolitical landscape. It's all up in the air right now.
As investors, we do know one thing: Markets hate uncertainty.
But that doesn't mean we have to sit back and do nothing until we know how it all turns out. Instead, we can look at what has happened before during global power shifts to understand what might come next.
My friend and colleague Steve Sjuggerud did exactly that – 20 years ago.
The first special report he ever wrote to True Wealth readers was titled "What Happens to Stock Markets After National Security Is Threatened." It published on September 12, 2001... the day after the World Trade Center attacks.
Steve said it was the most chaotic moment he has ever lived through. It was terrifying not just as an investor, but as a human being. "I thought, what kind of world would my one-year-old son end up living in?" he told me.
The stock market closed for nearly a week. And when it finally opened, the Dow Jones Industrial Average fell 7.1% in a day – its largest-ever daily decline at that time.
Even before that happened, though, Steve's readers needed to know what to expect. So he dug into history and found a repeatable pattern. Here's what he wrote back then...
What happens to stock markets after national security is threatened? Well we only have a few instances from this century to draw from. But the almost unanimous answer this:
- Stock markets fall at first, in shock, and mass uncertainty sets in.
- The uncertainty is resolved, and stock markets roar higher than where they began.
Now, I want to be crystal clear. The recent news from the Middle East is nothing like what happened 20 years ago. This was not an attack on our soil.
I don't expect it to have a dramatic impact on the U.S. stock market. But I do believe it's ushering in an era of uncertainty... And uncertainty is something you must take advantage of when you can as an investor.
You see, stocks fall initially during uncertain times because investors move money to higher ground. They get scared, so they sell out of stocks and other investments. And they buy into so-called "safe haven" investments.
So even before the fear passes and "risk on" investments soar higher again, these safe-haven assets can be a great place to put your money...
Tomorrow, I'll share the safe-haven investment that most are ignoring – for now. And I'll explain why it could be the perfect bet for today's uncertain times.
Good investing,
Brett Eversole
Further Reading
It pays to be prepared, no matter what's happening in the markets. And even the best investors can't predict the future, which is why you need to make sure your portfolio is ready for anything... Check out Dan Ferris' five strategies for weathering any market environment right here.
With market volatility and sky-high stock valuations, it's tempting to move to cash and wait for the next crash. But that can be a tricky thing to do. That's why you need to know how to spot a solid long-term investment today... Read more here: How to Find the Perfect Stock to Own for the Long Term.
Not all safe-haven assets are worth investing in. But this asset has a long history of providing big gains in a time of crisis...
HIGHS AND LOWS
NEW HIGHS OF NOTE LAST WEEK
Alphabet (GOOGL)... tech World Dominator
Apple (AAPL)... iconic tech giant
Facebook (FB)... social media giant
Sea Limited (SE)... Singaporean tech giant
Cloudflare (NET)... network security
Palo Alto Network (PANW)... cybersecurity
Quest Diagnostics (DGX)... medical data
Medtronic (MDT)... medical services
Thermo Fisher Scientific (TMO)... life sciences
Digital Realty (DLR)... data-center REIT
American Tower (AMT)... communications REIT
American Homes 4 Rent (AMH)... rental properties
Invitation Homes (INVH)... real estate "landlord"
Life Storage (LSI)... storage units
Comcast (CMCSA)... cable TV
American States Water (AWR)... utilities
Waste Management (WM)... trash and recycling
Cintas (CTAS)... uniform supplier
NEW LOWS OF NOTE LAST WEEK
Not many... It's a bull market, you know!
