the pause that refreshes

market vibes

Sunday August 17, 2025 Clayton, New York

“A person who has been punished is not less inclined to behave in a given way; at best, he learns how to avoid punishment.” BF Skinner

One would think wars involving significant losses of treasure and life would be bearish for stocks; however, throughout the Ukraine war, global equities have performed spectacularly. As I tap the keyboard this evening, most equity indexes here and abroad are at all-time highs. Therefore, one might think that with the burdens of reconstruction and changes in policies from war to peace, the future would be uncertain, especially for stocks. Actually there is very little doubt about it.

Historical data tells us wars are generally as profitable for stock investors as peace, often more so.. This article is an instructive read. It highlights bull and bear markets before and after the War of the Spanish Succession (1701–1714), often considered one of the first "world wars," involving major battles in Europe, North America, India, and the Caribbean. In my opinion, stock prices in the late 17th and 18th centuries resemble equity trends during several recent wars, including WWI and the Vietnam War; strong in the early years with brief bear market prior to or following peace.

Most wars are not won or lost. They run out of money and peace returns capital to trade. In the chart below, prices of the Dutch East India Co. fell 40% in 1712 because after 10 years of fighting, the cost of funding the war on all sides went up 350% (Grok). After the Treaty of Utrecht in 1713 and peace, the South Sea Bubble was probably the first modern debt-fueled postwar period of speculation.

In my opinion, despite the passage of hundreds of years, very little has changed. However, I could be wrong. I often am. Let’s find out where and why.