The German equity market soared from 1931 and continued to rise when Hitler started the Blitzkrieg. The market was closed in Aug, 1944 and remained closed until mid 1948. When it opened it took a straight plunge.
The following chart shows the performance of the CDAX Index from 1930 to 1950:
Click to enlarge
Source: Stock Markets during the second World War, Investment Office
Excerpts from the book Wealth, War & Wisdom, 2008-Barton Biggs:
“In late 1939, however, well ahead of the Blitzkrieg stock prices began to anticipate the overwhelming victories of 1940.”
“By 1940 and throughout 1941 the German economy was booming from military production. (…) The interesting insight is that by the late fall of 1941, the Berlin market was somehow sensing that Hitler’s luck, his infallibility were fading and that Germany’s military momentum had crested. (…) Did anyone know the tide had turned except the stock market? Certainly a few of the generals suspected.”
Re: ” …The interesting insight is that by the late fall of 1941, the Berlin market was somehow sensing that Hitler’s luck, his infallibility were fading and that Germany’s military momentum had crested. (…) Did anyone know the tide had turned except the stock market? Certainly a few of the generals suspected.”
With all due respect to Barton Biggs, this ‘insight’ about the stock market sensing Hitler’s luck running out is hindsight biased nonsense. After a near vertical ascent, a market going sideways could have been easily described as a consolidation phase at that time. No sensing of the war’s outcome needed.
If the market was so smart, why didn’t it foresee frozen prices and its closure coming?
Agree. Great point. Thanks for the comment.
@michael you are comparing a technical halt to the will of the market… its like saying a car does not work but you turned it off on purpose…
what i see from the chart is that capitalism works very well under fascism…