William O’Neil’s bestselling, How to Make Money in Stocks, which is based on a major study of market winners spanning over a century, provides invaluable insights into the patterns and the associated circumstances impacting stocks, time and time again.

Since the 1890s, the market has provided numerous examples of stocks demonstrating common behaviors through a range of periods impacted by major inflationary pressures and wars.

In 1893, a recession forced many railroads and steel producers out of business, while the start of the Spanish American War in 1898, saw an immediate need for Navy ships and other military items, many of which required steel. Surviving companies like Tennessee Coal, Iron and Railroad Company were kept busy with demand fueled by limited supplies, improved business conditions at home, and a growing worldwide economy. As a result, the stock almost tripled in less than a year.

Similar patterns are seen in Sea Containers and Texas Oil & Gas, enormous winners of the last big inflationary period in the 1970s, where they both surged around 500%. Likewise, Bethlehem Steel and Simmonds Precision were lucrative beneficiaries of the First World and Vietnam wars.

Why is this significant?

The current post-COVID world is now presenting a comparable backdrop for commodity stocks that saw demand crumble yet are now seeing economies return. Furthermore, markets are being impacted by the Russian-Ukraine conflict, which has created a financial and energy fight even for countries outside the main war zones.

These examples provide an important reminder when studying historical data that it is critical to look beyond the chart and to understand what companies were doing differently at the time, along with the environment that they were in.