Stock markets become immunised to recurring terrorist attacks

Stock markets

From the point of view of the stock markets, August is particularly interesting. Trading volumes are significantly lower than normal and, precisely because of that, price movements tend to be bigger.

It’s a month where the importance of certain events can be magnified, and an ideal month for sreading the hype and the impact generated by news which has very little or nothing to do with corporate results.

And I would say the difference between long-term investors’ trading volumes and those of short-term investors is proportionally the lowest of the year in August.

For that reason, so-called “traders” are traditionally impatient for the month to arrive, so that they can prolong any trend which may start up…with the least opposition possible.

That said, the big beneficiary is the long-term investor, given that August is traditionally a great month for buying stocks. It’s a good time to put in buy orders with a price limit below end-July prices, with the aim of trying to fish in troubled waters. This August events have occurred which are not of an economic nature. On the one hand, the very short-lived saga of North Korea and, on the other, the tragic attack in Barcelona. There are two reasons to buy stocks after that attack:

1. In the first place, the reality is that the recurrence of these attacks ends up immunising the markets against them.

2. And in second place, we can’t allow terrorists to make money with privileged information, taking short positions ahead of their actions. Furthermore, in this case, buying stocks contributes to the fight against terrorism.