Stock Market Precedent From Arab-Israeli War Is Bleak

The 1973 Arab-Israeli War, also known as the Yom Kippur War, has several similarities to today’s conflict with Iran. 

As Bloomberg macro strategist, Simon White, notes, the market outcome was not good...

...oil quadrupled, the dollar rallied over 15% and stocks faced their worst bear market since the Great Depression.

Then as today:

• inflation was already elevated when an energy shock hit,

• monetary policy was inappropriately loose,

• and the Federal Reserve’s independence was in question,

• while the stock market, in the era of the Nifty Fifty, was driven by only a handful of names.

If history rhymes, the most prudent portfolios will benefit from tail-risk insurance.