Syria and the Market

The situation in Syria has gone from bad to worse over the last few weeks.  The U.S. and allies are preparing for a possible military strike against President Assad’s regime in a country that has been torn apart by a brutal civil war.  This conflict has been raging for over two years and recently became even more heightened when Assad allegedly used chemical weapons against civilians.

Much like Iraq, the divisions along religious and political lines in Syria go back many years and are beyond the scope of this article.  It is clear, however, that there is no great solution to this issue.  Military action is not ideal in any scenario, but is absolutely necessary in some situations.  If the U.S. strikes Assad’s regime then by default we are supporting the rebels.  This leads to the next obvious question, who are these rebels?

Many of these rebels are Syrian civilians who have formed militia groups to fight Syrian government forces.  However, there are many confirmed reports of “jihadist” volunteers coming from other countries to help the rebels in their cause.  To my earlier point, there is no good option here.

All this being said, how will military action in Syria affect the stock market?  Of course no one has the definitive answer because we cannot predict the future, especially when it comes to the market.  We can look back to 2003, the start of the Iraq war, as a recent example of market behavior during times of conflict.  The period from 2003 – 2007 was one of the best in market history.  And when the market tanked in 2008 because of the financial crisis, it had nothing to do with any particular foreign conflict. Traumatic world events do not necessarily lead to market or economic disaster.

On any given day, this country is dealing with myriad social, economic, and political issues that could possibly lead to a decline in the market.

Here are just a few issues Coming to a Theater Near You this Fall:

> Possible military action in Syria (already discussed)

> Debt ceiling debate in Washington in early October

> Possible tapering of Fed’s bond purchase program, which could lead to even higher interest rates

My point being that there’s always something on the horizon that could temporarily impact the market or economy, but we see way more upside over the next 10 years than downside.  Stick with your investing game plan, and you’ll be rewarded for it in the long run.

–Mike Minter