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Over the weekend, Palestinian militant group launched a large-scale attack on Israel. The attack was a surprise for two reasons. First, though the two sides have gone back and forth with small attacks for years and volatility in the Middle East is nothing new, the scale, coordination, and number of attackers are unprecedented in modern times. Second, Israel, which is known for having one of the best defense systems in the world, was unable to detect or deter the surprise attack.
Investing Profitability & Emotion Mix Like Oil and Water
It suffices to say that the majority of the world hopes for peace and a resolution, with thousands of causalities it is tough for anyone not to feel emotional and sad. However, from a strictly investing perspective, investors must find a way to separate emotions from themselves because emotions like fear and greed can cloud judgment and lead to impulsive and irrational decisions. Below are 3 things investors should know about markets and war:
Markets Tend to Shrug Off Geopolitical Events
Investors must defer to historical data to avoid making decisions based on emotions. While history doesn't always repeat itself, it does tend to rhyme. Each geopolitical event is new and unique; however, history tells us that US equities usually encounter short-term weakness, but tend to absorb and shake off these events in the long-term.
Observe the Price Action vs. the News
If equity markets were easy, more investors would be profitable. Instead, Wall Street marches to the beat of its own drum and is forward-looking. For example, in late 2022, when inflation numbers hit their highest level in more than 40 years, markets reversed and finished higher on volume – marking the bear market low. Rather than taking news at face value, observe how equities react in the face of bad news.
Panic Rarely Pays Off
Investors should always be vigilant and manage risk. That said, panic rarely pays off. Rather than blowing out positions in fear, more times than not, investors are best served to see how their positions absorb lousy news in the coming days. Remain vigilant, but never panic.
3 Industries to Watch
Energy
Obviously, energy is the biggest beneficiary of war in the Middle East. Even before war broke out, oil prices were enjoying multi-week rallies. To "add fuel to the fire," the US Strategic Petroleum is at 40-year lows, and supply is waning for both commodities. Investors should also watch individual names such as Occidental Petroleum.
Counter-terrorism
Palantir is another beneficiary of unrest in the Middle East. The unique company specializes in software, security, and artificial intelligence solutions. Governments worldwide, including defense and intelligence agencies, use Palantir's software platforms to enhance their security and defense capabilities in several ways.
Traditional Defense Contractors
Despite the ongoing conflict in Ukraine, defense contractors such as General Dynamics, Boeing and Lockheed Martin have been falling. However, now the defense juggernauts are enjoying a new catalyst and more reasonable valuations – a bullish combination.
Conclusion
The recent large-scale attack by a Palestinian militant group on Israel is causing market volatility. Amidst the emotional impact of such events, investors are reminded to separate their emotions from investment decisions. Historical data suggests that while markets may experience short-term weakness during geopolitical events, they often recover in the long-term.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.
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Zacks Investment Ideas feature highlights: Occidental Petroleum, Palantir, General Dynamics, Boeing and Lockheed Martin
For Immediate Release
Chicago, IL – October 10, 2023 – Today, Zacks Investment Ideas feature highlights Occidental Petroleum (OXY - Free Report) , Palantir (PLTR - Free Report) , General Dynamics (GD - Free Report) , Boeing (BA - Free Report) and Lockheed Martin (LMT - Free Report) .
War & Wall Street: 3 Things You Need to Know
War in the Middle East
Over the weekend, Palestinian militant group launched a large-scale attack on Israel. The attack was a surprise for two reasons. First, though the two sides have gone back and forth with small attacks for years and volatility in the Middle East is nothing new, the scale, coordination, and number of attackers are unprecedented in modern times. Second, Israel, which is known for having one of the best defense systems in the world, was unable to detect or deter the surprise attack.
Investing Profitability & Emotion Mix Like Oil and Water
It suffices to say that the majority of the world hopes for peace and a resolution, with thousands of causalities it is tough for anyone not to feel emotional and sad. However, from a strictly investing perspective, investors must find a way to separate emotions from themselves because emotions like fear and greed can cloud judgment and lead to impulsive and irrational decisions. Below are 3 things investors should know about markets and war:
Markets Tend to Shrug Off Geopolitical Events
Investors must defer to historical data to avoid making decisions based on emotions. While history doesn't always repeat itself, it does tend to rhyme. Each geopolitical event is new and unique; however, history tells us that US equities usually encounter short-term weakness, but tend to absorb and shake off these events in the long-term.
Observe the Price Action vs. the News
If equity markets were easy, more investors would be profitable. Instead, Wall Street marches to the beat of its own drum and is forward-looking. For example, in late 2022, when inflation numbers hit their highest level in more than 40 years, markets reversed and finished higher on volume – marking the bear market low. Rather than taking news at face value, observe how equities react in the face of bad news.
Panic Rarely Pays Off
Investors should always be vigilant and manage risk. That said, panic rarely pays off. Rather than blowing out positions in fear, more times than not, investors are best served to see how their positions absorb lousy news in the coming days. Remain vigilant, but never panic.
3 Industries to Watch
Energy
Obviously, energy is the biggest beneficiary of war in the Middle East. Even before war broke out, oil prices were enjoying multi-week rallies. To "add fuel to the fire," the US Strategic Petroleum is at 40-year lows, and supply is waning for both commodities. Investors should also watch individual names such as Occidental Petroleum.
Counter-terrorism
Palantir is another beneficiary of unrest in the Middle East. The unique company specializes in software, security, and artificial intelligence solutions. Governments worldwide, including defense and intelligence agencies, use Palantir's software platforms to enhance their security and defense capabilities in several ways.
Traditional Defense Contractors
Despite the ongoing conflict in Ukraine, defense contractors such as General Dynamics, Boeing and Lockheed Martin have been falling. However, now the defense juggernauts are enjoying a new catalyst and more reasonable valuations – a bullish combination.
Conclusion
The recent large-scale attack by a Palestinian militant group on Israel is causing market volatility. Amidst the emotional impact of such events, investors are reminded to separate their emotions from investment decisions. Historical data suggests that while markets may experience short-term weakness during geopolitical events, they often recover in the long-term.
Why Haven't You Looked at Zacks' Top Stocks?
Since 2000, our top stock-picking strategies have blown away the S&P's +6.2 average gain per year. Amazingly, they soared with average gains of +46.4%, +49.5% and +55.2% per year. Today you can access their live picks without cost or obligation.
See Stocks Free >>
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performancefor information about the performance numbers displayed in this press release.