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Sector & Factor Performance During Wartime

Better than perhaps expected.

Nicolas Rabener
10 min read
7 Nov 2022

This research note was originally published by the CFA Institute’s EI blog.

SUMMARY

  • The S&P 500 increased during two of the three largest wars of the United States
  • Value, size, and momentum factors had positive returns during WW II
  • The top and worst-performing industries during WW II were diverse

INTRODUCTION

Before 2020, the threat of a global pandemic shutting down the world economy was not a top-of-mind concern for most investors. Pandemics were nothing new, of course, but no outbreak in recent history had suggested anything near the magnitude of COVID-19. SARS had broken out in 2002 and Ebola in 2014, for example, but both were contained rather quickly, and their corresponding toll in economic disruption and human lives hardly hinted at what COVID-19 would bring.

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