A macro hedge fund index compiled by Hedge Fund Research is down nearly 1 percent since Jan. 1
and over 4 percent for the last 12 months, one of the worst performing hedge fund indexes.
If you think politics is roiling United States markets, consider Brazil: The day after the Trump-induced turmoil on United States exchanges, the Brazilian market fell 10 percent
and trading had to be halted after news of a bribery scandal engulfed its relatively new president, Michel Temer.
Of 11 major geopolitical events examined by Mr. Stack’s firm, only two — the Nazi invasion of France in May 1940,
and Japan’s bombing of Pearl Harbor in December 1941 — led to market losses over one-week, three-month and one-year periods (and in the case of Pearl Harbor, the one-year decline was less than 1 percent).
Paulson & Company and Soros Fund Management, two of the best-known global macro hedge funds, which make bets on geopolitical
events, lost billions last year according to an annual hedge fund ranking compiled by LCH Investments.
“Historically speaking, and as a seasoned investor, I’d say investors should just
ignore geopolitical events like Brexit or whatever is happening in Brazil.”
The problem, Mr. Stack’s research has found, is that “geopolitical events may be widely feared,
and there will often be a knee-jerk market reaction when they’re unexpected, but seldom do they have a lasting impact.
Politics May Move the Market, but Rarely for Long -
The United States stock market shuddered last week on a report that President Trump had tried to stop an F. B.I.
