I recently read a laudable attempt in Briefing.com to explain what the stock market thinks about the prospects for war. I am posting my take on the article here (it will probably make the most sense if you manage to get a copy of the article and read it - Briefing.com, " Ahead Of The Curve: What Defense Stocks Are Saying", 11-Feb-03 00:53 ET, by Robert V. Green).

1. If defense stocks are selling off so strongly because the market is certain about an Iraqi war either not happening or being extremely brief, then how can we attribute weakness in the general market to uncertainties about the Iraq situation? Either defense investors are smarter than the rest of the market, or we have one serious disconnect here. And one of these two, defense stocks or the rest of the market, are in for a HUGE surprise. And such a surprise will REALLY get things churning.

2. Note that throughout the entire Persian Gulf drama in 1990-91, the market took a huge dip and then rallied big. But in the end, the market ended up FLAT from beginning to end (a total of 10 months or so). This tells me that at best, we should expect a rally that takes us to earlier highs where the market was not worrying too much about Iraq. I will claim that takes us back to those December highs. Thus, I will maintain once again that those highs mark the upper limit of an extended trading range that will beset us for some time to come. The only way we break above those levels convincingly is when economic prospects finally brighten in reality and not under the pen of over-optimistic analysts!

Be careful out there...but please do not panic. No matter what color is the latest fashion with our alert homeland security sentinels, you should maintain on-going readiness and vigilance. Only when preparedness is a regular part of your life routines can you truly face these uncertain times with confidence. This applies equally well inside and outside the financial world.