The three big current arguments against owning stocks or other risk assets are:
We will address the question of asset bubbles and economic slowing or deflation in another article. This one is about war risk to US stocks.
Note: This article is intended only to relate specifically to the S&P 500, and collaterally to broad, market-cap weighted, large-cap US indexes. ETFs that come under this specification include: SPY, VOO and IVV for the S&P 500 specifically; and probably total market ETFs such as ITOT and VTI, IWW and VTHR; and probably various ETFs following large-cap indexes from Russell such s VONE, ONEK, VONG, VONV, IWB, IWD, and IWL; or ETFs following US large-cap indexes from Standard and Poor's such as OEF.
War has not been bad for US stocks
The Russell reconstitution on Friday sparked some interesting moves in some of the components being added or deleted.
Many issues that were going to be added to the index sold off sharply on Friday's close, while some issues being deleted spiked higher. Stocks being added need to be bought and stocks being deleted need to be sold.
If a trader was paying close attention to the NYSE imbalances disseminated at 3:45 p.m. or the Nasdaq imbalances at 3:50 p.m., the moves were telegraphed.
During the last few reconstitutions, traders were reluctant to take the data at face value, since many of the imbalances flipped at the last second and traders had to scramble to cover and or reverse positions.
But on Friday, the imbalances stayed true to form, leaving traders wanting to participate from the event to fade the closing prints and wait to cover in after-hours or