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  • Jacob Rogers
  • Posted Articles: 7
  • Last Posted: 2017-06-08 11:09:23
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Terrorism and Wall Street

2017-04-15 02:49:33

There is no doubt that terrorism affects the overall relative calmness worldwide, specifically financial markets. We hear or watch different news about terrorist activities, from Iraq to Syria to Paris.



If you brush aside the immediate effects of terrorist attacks, you may be wondering if there are ripple effects, as planned by these groups, to interrupt our everyday living in more understated ways. Just take the Paris assaults on November 13, 2015. Following this violent act, the CAC 40 lost more than 1% just after the index began the trading session. But it was able to regain shortly after. Also, the Euro Stoxx 50 started lower but managed to recuperate.



Let’s take a stroll down the memory lane. On September 11, 2001, 19 militants connected to al-Qaeda hijacked four commercial airliners and staged suicide assaults against targets in the United States. Two of the airplanes flew into the towers of the World Trade Center in New York, the third plane struck the Pentagon, and the last one crashed in a field in Pennsylvania. That day the Dow Jones Industrial Average ended at 9,605.51. The market, which resumed its trading on Sept. 17, 2001, and recorded an intraday low of 8,755.46, would not improve for a month.



The aforementioned events denote how terrorist acts can impact stocks and markets around the globe. On that note, most major banks and brokerage firms located in London and New York are exerting efforts to achieve maximum security and have redundancy in place to avoid or curtail such assaults.



One of the best ways to responding to terror is going back to basics: diversification. Terrorism normally targets strategic investments such as financial institutions and oil fields. Such actions are often viewed as having their biggest impact on operations of airlines, automakers, oil companies, and other related firms. Hence, a portfolio with nothing but stocks in these firms is likely to suffer the most.



Given that, investors can turn to certain stocks regarded safe havens. One can invest in defense and security shares. The majority of them hold up well on their own. Plus they may be considered good choices even in an arena where terrorism does not take the spotlight.