Yesterday about 2/3 of the way through the regular session the market sold off sharply. The sell-off was attributed to (beware explanation fallacy, but still) comments from Chuck Hagel about North Korea. Over the years I have mentioned a couple of times that we own Northrop Grumman (NYSE:NOC).
The reason I own it is that it is my belief that in the face of some sort of military threat that it and the other defense stocks will generally go up. The table below shows this in action with NOC and three other defense companies. Yesterday was obviously just a microcosm as I don't think North Korea will be a meaningful long term issue at least I hope not.
Interesting that the news did nothing for gold. There is a theory floating out there that the ubiquity of gold ETFs has altered the characteristics of how it trades. GLD, which we own for clients, has $61 billion in it, IAU has another $10 billion and the other smaller ones maybe another couple of billion (SGOL has $1.8 billion). While some of that seventy whatever billion might have been in futures, coins and bars most of it probably new to gold and so maybe it has distorted the panic value. I think it will take more time to draw a firmer conclusion on that however.