What if the bird flu turns into a pandemic with global consequences every bit as devastating as many have begun to worry?

In such an event, the least of our worries may be what happens to the stock market.

Nevertheless, as one reader recently emailed, “I wonder if I should be moving from equities to fixed income investments now [to protect my portfolio from such a pandemic]. I realize it is behavior like this that starts panics. I don't want to help start one, but I also don't want to get caught up in one.”

To respond to this email message, I first turned to the investment newsletters to see what their editors had to say. Predictably, there is a wide range of opinion on how seriously to take the prospect of such a pandemic. There may be some solace in discovering that some editors with stellar, long-term records are downplaying the risks.

Consider what Richard Russell recently wrote. Russell is editor of Dow Theory Letters, a market timing newsletter with one of the best long-term track records among any that the Hulbert Financial Digest tracks.

Russell wrote: “God forgive me, but I've been wondering whether the bird flu thing is mostly flimflam. It still hasn't been demonstrated that the bird flu can be passed from person to person, but, regardless, Mr. Bush and the guys are treating it as a potential national disaster. Yesterday, the Prez announced a $7.1 billion plan to prepare for a flu pandemic -- we’re to develop improved vaccines, and stockpile antiviral drugs as part of the new White House strategy. But can you develop a vaccine for a specific variety of flu that does not yet exist?

“And I think of the government's belated reaction to the New Orleans disaster, and that's not going to happen with the flu, no siree. So here's the Prez jumping the gun (being preemptive) on the coming great potential flu pandemic. Said Mr. Bush yesterday, ‘If the virus were to develop the capacity for sustained human-to-human transmission, it could quickly spread across the globe.’ And cynical me, I wondered who would get the order for the coming antiviral drugs. And I continue to wonder -- is the flu pandemic just a medical version of the great Iraq menace? As they ask in the law business --, 'Who benefits?’ But when you think about it -- who dares to oppose Bush on this potentially life-saving venture, even if the defense does cost a king's ransom and maybe more?”

Additional solace comes from reviewing the stock market’s reaction to the last great flu pandemic, which occurred in 1918 - 1919 and is considered by many to be the worst epidemic in recorded history.

According to a Stanford University website, a fifth of the world’s population was infected in that epidemic, and an estimated 20 to 40 million people died of it. The infection rate was even higher in the U.S., where 28 percent of the population came down with the disease and 675,000 died. “The effect of the influenza epidemic was so severe that the average life span in the U.S. was depressed by 10 years.”

Surely, then, the flu pandemic of 1918 -19 at least qualifies as approaching the magnitude of the kind of crisis that is envisioned today by those worried about another pandemic.

Yet, the stock market did not crash in the wake of the 1918 - 19 pandemic. Indeed, it rose smartly.

To be sure, measuring the extent of that rise is not an exact science, since it’s impossible to pinpoint a precise day on which the epidemic began. I decided to focus on September 1918, as it would appear to be the month that the number of people infected with the virus in the U.S. began to mushroom.

1918 Stock Market Results

Notice that the Dow Jones Industrials Average (TICKER:INDU) rose 2.2 percent during September 1918 and rose an additional 0.2 percent over the next five months. And, over the full year from August 31, 1918, to August 31, 1919, the DJIA rose 26.4 percent.

It is also worth noting that we were just emerging from World War I when the pandemic broke out. Some might argue that it was the euphoria over that war’s ending that trumped any economic concern about a flu pandemic.

But, historical comparisons are always an inexact science. The world is never the same at two different times, so it is impossible to completely isolate the variables you want to measure from others you want to ignore. Unless one decides to be completely nihilistic and argue that no comparisons are ever possible, we have no choice but to do the best we can, recognizing that any generalizations are more suggestive than conclusive.

At a minimum, however, the comparison with the 1918 - 19 flu pandemic does show that the stock market does not have to crash in the face of a global pandemic.

Mark Hulbert is editor of the Hulbert Financial Digest, a service of Marketwatch that, for nearly 24 years, has tracked the performance of investment advisory newsletters. A section of the Marketwatch website called "Hulbert Interactive" (marketwatch.com/hulbertinteractive) allows users to conduct extensive research on the HFD database.

Mark can be contacted via email at mhulbert@marketwatch.com.