X
X
Tired?
Unfocused?
Off your game?

Read our free Dr K report on how to optimize your mind and body so you can boost your focus when trading the markets.
YES, SEND ME THE REPORT !
NO, I'M NOT INTERESTED
Your email will always remain private.

Market Lab Report - Kennedy vs. Trump - How did US markets fare during the Cuban Missile Crisis?

Current tensions between the U.S. and North Korea echo those of  the Cuban Missile Crisis in 1962 when Kennedy was president and the nation stood at the brink of nuclear war. Today, we have a "young punk" who rules with an ego the size of Manhattan, and yes, I'm speaking of the baby-faced, communist leader of North Korea, Kim Jong-un. Sanctions make no difference to Jong-un as the U.N. has enacted numerous cumulative rounds of sanctions against North Korea for its nuclear program and missile tests. Jong-un has also had various members of his family executed.

Kennedy always made sure Khrushchev had a face-saving way out. “Every opportunity was to be given to the Russians to find a peaceful settlement which would not diminish their national security or be a public humiliation,” his brother Robert Kennedy wrote. “I am not going to push the Russians an inch beyond what is necessary,” the president said.

By contrast, Trump and Kim are potentially a toxic combination where each may feel their manhood is being attacked. Ray Dalio, chairman and chief investment officer at Bridgewater Associates, has urged investors to hedge their risks with gold "just in case" as both leaders are confrontational and militaristic.

While it is true that most crises situations are short-lived for the stock market, that's a relative statement. If we look at 1962 during the Cuban Missile Crisis standoff between Kennedy and Castro when the nation stood at the brink of nuclear war, it ran only from Oct 16-28 but the S&P 500 fell nearly 10% from peak to trough as shown by the highlighted area in the chart below.

Thus, trying to predict the depth of a correction during a crisis is an ill-conceived strategy. Price/volume action got you to safety, but it also signaled the all-clear by the huge volume buy spike off the lows as seen in the highlighted area above, just a few days before a peaceful resolution was reached.  Leading stocks that held up during the selloff may have staged Wyckoff undercut & rally moves which could have been bought. From the lows brought on by the crisis, the SP500 proceeded to rally almost 30% over the next few months.

When it comes to correcting markets, it is better to let price/volume take you out of your positions as a market correction takes hold as we have guided members at Virtue of Selfish Investing. And for those who short, Gil Morales has been writing condensed pieces on the essential rules of short-selling from our book "Short-Selling with the O'Neil Disciples".


Like what you read?
Let us help you make sense of these markets by signing up for our free Market Lab Reports:
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
FOR OUR FREE MARKET LAB REPORT :
Copyright ©2018 MoKa Investors, LLC DBA Virtue of Selfish Investing.
All Rights Reserved.
privacy policy