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Here's the One Thing Every Investor Needs to Know About SyriaBy
Thursday, September 12, 2013
Wall Street doesn't care about the situation in Syria.
For proof, U.S. stocks are up seven trading days in a row.
Stocks fall whenever there's "uncertainty" out there. Yet, stocks have gone up for seven straight days.
And that brings us to today's brutal truth...
If a crisis doesn't affect commerce, then – for the most part – it doesn't affect the stock market.
For example, Apple will keep selling iPhones and Wal-Mart will keep selling, well, everything. The world's biggest companies will keep humming along, with barely a downward blip in sales.
In the case of Syria, so far at least, there's been no real effect on commerce. That's why the stock market has been able to keep going up. In short, companies like Apple and Wal-Mart are not affected.
My colleague Dan Ferris explains it this way: "Shopping trumps politics." In this case, commerce trumps the tragedy in Syria. That's why Wall Street isn't paying much attention to the situation there.
Don't get me wrong. I'm not saying the people on Wall Street don't care about what happens. What I mean is, what happens in Syria simply doesn't affect U.S. businesses that much.
I've seen this brutal truth driven home many times in my career...
One of the most surprising times to me was the 2004 tsunami that struck Indonesia, where 230,000 people died.
A few hundred thousand people died... and it hardly affected world stock prices. Heck, Indonesia's stock market even hit new highs a few days after the tsunami.
So when I get asked, "How will the Syria situation affect the stock market?"
My answer is, "It won't. Not yet, at least."
The answer might sound heartless. But believe me, it is not intended that way.
What's happened in Syria is terrible. But its effect on Wall Street will likely be minimal...
Remember, the question isn't, "How do I feel about 1,400 deaths due to chemical weapons?" The answer there is much different.
The question is, "How will Syria affect stocks?"
As long as the conflict doesn't escalate to the point where it could affect companies like Apple and Wal-Mart… the answer is, "Not much at all."
Good investing,
Steve
Further Reading:
"There's ALWAYS a reason NOT to invest," writes Steve. You have plenty of problems to choose from: the dollar, the debt, the deficit, politicians, Europe... and now Syria.
But "the greater risk today is NOT owning stocks." Stocks are CHEAP. And "in a zero-percent world, you can't sit on the sidelines." Read more here: You're Foolish If You're Not Invested Right Now.
Market NotesA BREAKOUT FOR BIG CHEAP TECH The market is waking up to our "Big Cheap Tech" idea...
Regular readers know our "Big Cheap Tech" label covers the biggest and best companies in the technology sector. These businesses have thick profit margins, generate huge amounts of cash, and pay growing dividend streams to shareholders. We're talking about companies like Microsoft, Intel, and Apple.
Most of these tech giants aren't the "hyper growth" stories they used to be. They're now slower-growing businesses that generate reliable cash flows... which are directed toward shareholders. This lack of fast growth has caused most folks to ignore Big Tech... which has led to it becoming cheap.
A "one click" way to track (and invest in) this idea is the iShares Technology Fund (IYW). Its top holdings include Apple, Microsoft, Google, IBM, and Cisco.
The chart below shows the past two years of trading in IYW. Shares have traded sideways since the beginning of 2012. But just this week, the fund "broke out" to its highest level in years. The trend in Big Cheap Tech is clear... and it's UP.
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