Tensions on Korean Peninsula affect stocks and economy

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The tensions in the Korean Peninsula between South Korea and North Korea are higher than they have been since the Korean War. It is difficult to predict how it will shake out and whether or not a war will break out in the region. You would think a war is not very likely because obviously the North is over matched by South Korea and in particular, the U.S. However, the situation is so tense that a war can break out by mistakes on either side.

The global economy and stock markets will be greatly affected if a war breaks out between North Korea and South Korea/United States. If a war breaks out, you will certainly see global stock markets plunge. Stocks of companies that do a lot business in the region or based in the region will see even greater drops in price. In fact, some stocks have already been somewhat affected by the tensions alone. This creates uncertainty in the market which is always a very bad thing.

However, when there is the potential for volatility in the market, opportunities are born. If you are a gambler or are confident that nothing even close to a war will occur in that region then you may find certain stocks at good prices. If your gamble turns out to be correct then you can make some good money. However, if the worst case scenario occurs and a war breaks out in the region, those stocks will drop like a rock, at least until the war is over.

Like I said, it is very tough to predict what exactly will happen in the near future between North Korea and South Korea. If you are not a big time gambler, which is the safer way to be, you can just pick a few stocks and follow their progress for the next few weeks as this situation unfolds. You may gain some very valuable information that can be used the next time there are tensions or chance of war between two countries.