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  • Writer's pictureThomas Hayes

You Buy the Missiles in the Air

One of my favorite stories about how people react to times of crisis in the stock market, is about the great Art Cashin, a legendary fixture on Wall Street, during the Cuban Missile crisis. The story, as told by Ritholtz Wealth Management’s Josh Brown on CNBC, the day after Russia invaded Ukraine in 2022, goes something like this.

 

Early in Art's career, during the run up to the Cuban Missile Crisis, he was working as a floor broker on the New York Stock Exchange. A rumor hits the trading floor that the missiles are in the air, they're coming towards the continental US. Art is running around with sell orders, trying to get sales done, when his boss collars him and says, "Woah Arthur, what are you doing!?!" Art says, "What do you mean what am I doing? The missiles are in the air, I'm selling!". His boss replies, "No, no, no, you buy the missiles in the air. Because if it actually happens, don't worry about it, it's over anyways, but if doesn't happen, you're going to get this massive relief rally. You have to be long the missiles in the air."

 

Panic around headline news in the stock market is a common occurrence. A negative headline hits, and there is a knee jerk reaction. But eventually, the crisis is in the past, and markets move on.  When it seems like things are at their worst, the proper response can often be counterintuitive, as Art's boss wisely pointed out.

 

 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.

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