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Giving Thanks this Memorial Day and Looking Back at May 1940


Just wanted to say happy Memorial Day to everyone and to give thanks to the service and sacrifice of those who have given their lives for our country.

Since this is Memorial Day and the last day of May, I wanted to post on something interesting that I noticed which connects Memorial Day, war history and the financial headlines of this month. Much of the financial news this month was on the debt problems in Greece and Europe. This contributed to the Dow losing 8% for the month. For us savers, the concern over Europe had forced Treasury yields down and strengthened the dollar which could allow the Fed to delay rate hikes. The 8% loss in the Dow was the worst May for the Dow since May 1940 when the Dow lost 22%. For those who are history buffs, you might remember May 1940.

May 1940 was one of the most shocking months of War World II. It was still about 18 months before Japan's attack on Pearl Harbor, but what happened in Europe in May 1940 was felt around the world. On May 10th Winston Churchill replaced Neville Chamberlain as the British Prime Minister. At the same time, the Nazis began their attack. Below are excerpts from Wikipedia:

Germany invaded France, Belgium, the Netherlands, and Luxembourg. The Netherlands and Belgium were overrun using blitzkrieg tactics in a few days and weeks, respectively. The French fortified Maginot Line was circumvented by a flanking movement through the thickly wooded Ardennes region, mistakenly perceived by French planners as an impenetrable natural barrier against armoured vehicles. British troops were forced to evacuate the continent at Dunkirk, abandoning their heavy equipment by the end of the month.

I graphed the closing prices of the Dow Jones for May 1940. Note how the Dow plummeted soon after May 10th. Credit to Analyze Indices for the data.

Dow Jones Graph for May 1940

The debt crisis that Greece and Europe are now experiencing pales in comparison to the crisis in May 1940. Our national and global economy may have problems, but we're not facing the threats that existed in May 1940. Just like it did before, our economy will improve.

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Tuphat   |     |   Comment #1
Thanks for an interesting post.  I spent part of the weekend walking around Section 60 of Arlington National Cemetery, saying a silent prayer of thanks for the KIA interred there and elsewhere.  I just hope our political leaders are worthy stewards.

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