No doubt you have heard that the North Koreans fired some test missiles which has caused some reaction in various capital markets. According to a graphic on CNBC Asia, one of the missiles has a range of 3500-4500 km and could reach parts of Alaska.

Typically in the face of this type of scare US dollars rally, US treasuries rally, defense stocks do well, gold goes up and the Swiss franc might also draw some flow even if not from the US dollar.

While this is unlikely to have a lasting impact on markets it may make sense to study the reactions of different stock markets, assets classes, currencies, sectors and so on.

After 9/11 we were told to expect more attacks. I don't feel the need to devote space to how much danger the US may or may not be in at this point but certain things will go up in the face of a crisis.

This episode may be something big or nothing at all but study the reactions if there are any. Actually seeing market reactions can be very useful compared to my just telling you what usually happens.

For all I know this episode will have no impact at all, making this post useless but if there is a reaction it should be short and not that painful.

The notion of how to get defensive and when to get defensive is important and does not get enough attention in main stream media.