We Are Boston

As Boston recovers from the horrific terror attack perpetrated Monday, we send our deepest sympathies to the victims, their families and those touched by the incident. Nearly everyone is affected by the scenes they saw in Boston, particularly in post-9/11 America. Our thoughts are with those impacted.

With 3 dead and 176 (at least) injured, the lives lost and those forever altered both physically and psychologically are beyond tragic. News also broke Tuesday and Wednesday politicians, including President Obama, had been targeted with letters poisoned with the toxin Ricin.

It’s natural to feel a sense of shock and fear associated with these events. And yet, hard as it may be, life has to go on—and go on it will. As with other calamitous events, we’ve seen discussion pondering the potential stock market impact of this week’s terrorism. Yet history shows little historical market impact from terrorist attacks.

After markets reopened following 9/11, stocks fell sharply. Yet roughly 19 trading days later (October 10, 2001), September 10 S&P 500 levels were regained. And this was during the Tech-led bear market, which began March 24, 2000. Subsequent terror strikes, like the Madrid bombings, saw the S&P 500 recover in five trading sessions. Stocks ended up on July 7, 2005—the day London was struck. Could the fears brought by this week’s attacks cause additional volatility? Sure. But suggesting terrorism is likely to derail an expansion or bull market is giving the perpetrators vastly too much credit. Volatility in the near term may come, but simply, good people, capitalism and freedom are stronger than evil cowards who seek to harm innocent civilians as a twisted means to some dubious political end. (Which is true whether these perpetrators turn out to be foreign or domestic.)

In a more temporal sense, we believe resilient capital markets will weather the fear and continue on an uneven and jagged journey higher, driven by the much stronger forces of a global economic expansion, robust private sector, improving housing and more.

Our thoughts go out to Boston and all those affected by this tragedy. As damaging as the attack was, there is also a resolute confidence justice will be served and the city shall recover from its wounds. Capital markets mirror that resilience. Much like New York in 2001, the city of Boston, backed by support nationwide, will not let this strike stop it from being one of the world’s premier cities.

Terrorists would be well served to receive this message after all the examples throughout history: Challenging free people who can self-determine their lives is a losing enterprise. Perhaps the poisoned letters found this week illustrate how true this actually is: The letters never made it remotely near their targets—since 2001 and 2004’s laced letters, all mail bound for the Capitol is screened.

Our suggestion is to set aside market-related fears tied to terrorism. This is a time to appreciate the people around you and spare a thought or a prayer for those who are suffering.