By DAVID MOON, Moon Capital Management
Last week, I made fun of CNBC's Times Square studio, noting that it is not
nearly as significant as it appears on television. This week, however, I
want to congratulate CNBC for one of the most insightful phrases I have seen or
heard from a financial journalist in a long time. Tuesday afternoon, after
a topsy-turvy day in which the stock market vacillated back and forth between
positive and negative territory, a CNBC announcer made a passing reference to
'the most anticipated stock rally of all time.' Drawing on Sadaam
Hussein's 1990 comment, he might have called it the 'mother of all anticipated
stock market rallies.' Many investors are convinced military action in
Iraq will spark a stock price recovery.
I am afraid a watched pot never boils.
The stock market is not like a gas grill, easily turned on and off.
Every day I hear comments from people waiting for someone to ignite the stock
market, based on the outcome of actions in Iraq.
Some investors seem to favor military action in Iraq as the cure for some
sort of financial, economic or investment ills. 'Let's kick some butt so
we can get back to making some money!'
But war is not some male bastion where Neanderthals walk around eating turkey
legs the size of dinosaur bones. Nor is it a game where success is
measured by the number of conference titles or consecutive defeats over an
Regardless of the presence or absence of a direct connection between Iraq and
Al-Queda, the terrorists who attacked our country on September 11 made a grave
mistake. It was a mistake for which many of their comrades have already
paid with their lives and liberty. They struck at the king and didn't kill
him. (I can already anticipate the 'arrogant American' letters and
emails.) In 1991, we made a similar mistake by leaving in power a ruthless
killer who later congratulated the September 11 highjackers, calling them heroes
and saints in the eyes of God. This is the same killer who, when offended
by someone's actions, stuffs 'guilty' men into giant commercial plastic
shredders. The fortunate victims are fed head-first and die
instantly. Others scream in pain as first their feet and legs, then the
remainder of their torso is shredded.
Two weeks ago, I stood on a New York sidewalk, next to the Trinity Church
graveyard, looking into what was the World Trade Center. I can only
describe the site as a giant, complex hole. A hole where once stood two
110-story buildings and several smaller ones. I looked around and the
largest building in the vicinity appeared no taller than 30 or 40 stories.
I tried to imagine where the tops of the towers once peaked. Then I
imagined a clear September morning with people jumping from that height.
When those people finally hit the ground ' perhaps on the sidewalk where I was
standing ' they were traveling up to 250 feet per second ' or somewhere between
125 and 150 miles per hour. To my left was a homemade memorial constructed
from two beams recovered from the wreckage, welded into the western symbol of
sacrifice ' a cross. Below the cross was a giant hand painted
banner. Was the red ink on the sign intentionally the color of blood, or
was that a coincidence? The banner read 'Never Forget.'
I wonder how different this site would look if those planes contained a
Whether you support our actions in Iraq or are disgusted by them, they have
nothing to do with the stock market or the economy. Using historical data,
one can support almost any conclusion about the correlation between stock prices
and war. Trying (or hoping) to profit from it is, at best, a 50/50
We will never know the total financial impact of the current geopolitical
environment. And while we can measure the direct financial costs of our
military actions, we can never know the unknown costs of what we might not
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).