Bad News from Middle East --- Buy or Sell Stocks?
Question:
This is not a political commentary but a brain storming investment exercise.
Answer:
The immediate, knee jerking reaction for most people is to sell everything that moves, and those that don't.
For the first day or 2, everything will go down - everything. except cash.
Once the initial panic is over, and people start realizing that they are still alive and no hordes of mujahideen are at their doors, then the dumpster searches begin.
I would buy stocks related to defence ( Boeing, Lockheed, etc ), and oil/gas ( Exxon, Shell, etc ). But, honestly, at that time, most stocks will be a bargain, so just choose good solid stocks like Citicorp, or GE, or Home Depot, Berkshire, etc - buy then hold.
Essentially large war in middle east=skyrocketing gas prices.
Buy oil--there's an oil etf (the ticker symbol of which I can't remember off the top of my head). You might also consider stock in royalty trusts that own oil fields in North America. I own or have owned Prudhoe Bay Trust (BPT) the Sabine (SBR) and Harvest Energy (HTE) at various times and all three pay sizeable dividends and would probably go up.
Just about everything else would probably go down after such a major rumble from the middle east--how long depends on the size of the war.
You might also consider shorting stocks that would likely be hit hard by an economic downturn and a corresponding decrease in consumer spending--retailers are an obvious target.
Military stocks might also do well (they might sell to the companies in question and even if they don't there's a good chance the US might be sucked in).
And of course people will still get older-- stick with medical.
First things to come to mind.
Sell all immediately, you can always buy back later if a sector still looks ok. Alternatively, sell the lot and buy Indian shares, there are some great opportunities in India plus economic stability. Have a look at www.sharesdaily.in
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