It’s another case of Wall Street being way off base: In brief, the Israeli-Lebanese conflict isn’t following the Street’s script.

Shortly after the hostilities kicked off on July 12, the sentiment on Wall Street was overwhelming that the fighting would be short-lived, lasting a few days or perhaps a week before diplomacy would succeed in ending the dispute. With the conflict in its 17th day Friday and showing no signs of easing — and possibly even expanding — what’s the investor to think about the war’s future impact on the market?

A clue may perhaps be gleaned from how stock prices have reacted to past wars.To give its clients some sense of what to expect, a St. Petersburg, Fla.-based brokerage firm, Raymond James Financial, took a look at what happened to the market during 10 wars over the past 67 years, kicking off with Germany’s invasion of Poland in September 1939.

What’s intriguing is that wars, contrary to what you might think, are not necessarily indicative of falling stock prices. For example, during the one-, three-, six-, and 12-month periods after each of the 10 wars (40 time periods total), stocks rose on 24 occasions.

Following the Cuban missile crisis in October 1962, stock prices posted gains of 24% and 30.3% six and nine months later, respectively. Likewise, 12 months after the second Iraq war began in March 2003, stocks had shown a 23.2% rise.

This suggests to some traders that when push comes to shove, it’s the key influences we’re all aware of — earnings, the economy, and interest rates — that primarily dictate the course of stock prices. Although disturbing, wars simply come and go, one trader said.

Equally disturbing in the Raymond James study is the finding that of the 10 wars, the three that most negatively affected stocks all involved the Middle East.

For example, a year after the start of the Yom Kippur war on October 6, 1973 — when Egypt and Syria attacked Israel on the Jewish people’s high holy day — stocks showed a wicked loss of 38%. That conflict, which ended October 24 with a decisive Israeli victory, set the stage for the single largest 12-month decline among the 10 wars.

The second-biggest loss followed the start of Operation Enduring in October 2001. In the ensuing 12 months, the market fell 18.1%.

The third-biggest drop, 10.3%, was sparked by the Suez Crisis in October 1956, a conflict that pitted Egypt against an alliance of France, Britain, and Israel.

Clearly, many investors are not overly concerned about the Israeli-Lebanese fighting, as evidenced by Monday and Tuesday’s more than 230-point surge in the Dow. Part of their lack of fear may well reflect the general belief that major powers will intervene at some point and bring about a cessation of the fighting.

Veteran investment adviser Charles Allmon doesn’t share this enthusiasm, arguing that the mess in the Middle East will only get worse. He’s especially concerned, he says, about Iran’s ambitions to be the dominant force in the Mideast, which, he contends, will invariably lead to more conflicts in the region, still higher oil prices, and additional volatility in the stock market.

An even bigger threat, Mr. Allmon says, is “the impending clash of civilizations. Islam is on the move. Its conquest of Europe is already a fact of life — that’s why you’ve got tens of thousands of people fleeing Holland and France to Canada and New Zealand.

“There’s a Muslim onslaught on the way,” he says. “Just go to Dearborn, Mich., America’s largest center of Muslim population and a home for radical Islam. You’ve got 600 mosques in this country and they’re still growing.”

Mr. Allmon also views China, which manufactures the rockets that Hezbollah is using to bomb Israel, as a potential threat. He worries about a widely reported comment by a Chinese general, who said, “China could lose 200 million people in a war and still win it.”

So what’s his advice to investors? “Cash is the best investment word right now, but no one wants to hear that,” the editor of the Growth Stock Outlook newsletter in Chevy Chase, Md., says. Mr. Allmon, who also manages $115 million in assets, notes that his managed accounts are presently 70% in cash, given his strong belief that the stock market is headed lower between now and year-end.

That does not mean stocks should be taboo, he says. He strongly favors such sectors as gold, energy, and tobacco. In this context, his best bets — stocks he views as solid defensive plays in the currently dangerous market — are Homestake Mining, Altria (formerly Philip Morris), Conoco Phillips, and Chevron. Another favorite is Bristol-Myers Squibb, which Mr. Allmon notes has the best pipeline of new drugs of any pharmaceutical company.

dandordan@aol.com