North Korea and the Stock Market

Simon Constable writes:

The Aug. 10 market decline of almost 200 points on the Dow Jones Industrial Average seemed to confirm the dire view of the world and egged on the talk-show pundits. That’s understandable. Bleak warnings usually make for great TV ratings.

But the truth about the likelihood of imminent nuclear war is somewhat different, and it usually doesn’t get ratings.

“North Korea isn’t scaring people,” says Eddy Elfenbein, author of the Crossing Wall Street blog. “Rather, people who wanted to be scared (and exit their positions) have found an excuse in Pyongyang.”

In other words, some investors decided Aug. 10 was a reasonable time to ditch their stock holdings, and it had little to do with the potential start of another war on the Korean Peninsula.

Investors, such as Elfenbein, are telling the world the opposite of what talk-show guests are saying. We know this by looking at the level of the stock market, which in some ways is a crowd-sourced view of the future state of the world.

Posted by on August 15th, 2017 at 12:06 am


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