By Kevin Wood, CFP™️ - March 2026
Every few years, headlines remind us how uncertain the world can be.
Recently tensions in the Middle East escalated sharply after military strikes between Israel, Iran and regional forces. The human impact of events like this is tragic and our thoughts are always with those directly affected.
But when events like this dominate the news cycle, clients often ask the same question:
“What does this mean for my portfolio?”
The short answer is usually: less than you might think.
And there’s a good reason for that.
In the short term, markets can react to headlines.
But over time, they are driven by economics.
Financial markets process information differently from how we experience news.
Headlines focus on drama and immediacy.
Markets focus on probability and economic impact.
When geopolitical events occur, investors quickly assess one key question:
Will this change global economic growth, company earnings or interest rates?
If the answer is no, markets tend to move far less than the headlines might suggest.
For example, following the recent escalation in the Middle East, the S&P 500 fell roughly 1.5% over five days, while global equities were essentially flat over the same period.
In other words:
A major geopolitical event occurred. But the global economic outlook barely changed.
So markets largely stayed calm.
Volatility Isn’t the Same as Crisis
Periods of geopolitical tension often bring a rise in market volatility.
That’s normal.
One commonly watched measure of market uncertainty is the VIX index, sometimes called the market’s “fear gauge”. It measures how much volatility investors expect in US equities over the next month.
Recently the VIX moved to around 24, compared with a long-term average of roughly 19.
That tells us something important:
Markets are acknowledging uncertainty.
But they are not pricing a global financial crisis.
For context, during major market stress events the VIX has surged far higher:
Event VIX Level
Global Financial Crisis (2008) ~80
COVID market panic (2020) ~85
Recent geopolitical tensions ~24
Perspective matters.
History Is Clear: Markets Recover From Conflict
One of the most robust findings in financial research is this:
Geopolitical crises rarely derail long-term equity markets.
Research from asset manager BlackRock examined market returns after major geopolitical shocks since the Second World War. The findings were consistent:
Markets typically fall modestly during the event…
…but recover within months as economic fundamentals reassert themselves.
Examples include:
Event Market Impact
Cuban Missile Crisis (1962) Markets recovered within months
Gulf War (1990) Global markets rebounded quickly
Iraq War (2003) Equities rose during the following year
Russia–Ukraine invasion (2022) Markets recovered within months
This is because the global economy is far larger and more resilient than any single geopolitical event.
The Real Risk to Investors Isn’t Conflict
It’s behaviour.
When uncertainty rises, investors often feel a strong urge to do something.
Sell.
Move to cash.
Wait for things to “settle”.
But decades of data show this can be extremely damaging.
Research from JP Morgan found that if an investor missed just the 10 best days in the market over a 20-year period, their returns could be cut in half.
The problem?
Many of those best days occur immediately after periods of bad news.
Which means the investors who exit the market during turbulent periods often miss the recovery.
Why Diversification Matters
Well-constructed portfolios are built with events like this in mind.
They spread investments across:
Different countries
Different sectors
Different asset classes
Thousands of companies globally
That diversification means no single event dominates outcomes.
Even large geopolitical events typically affect only a small part of the global economy.
And the world’s largest companies — the businesses that dominate global stock markets — generate revenues from many regions simultaneously.
The Oak Four Approach
At Oak Four we believe successful investing is built on a few simple principles:
Diversification reduces risk
Markets price information quickly
Long-term discipline beats short-term reaction
Which means the most powerful strategy during uncertain periods is often the simplest one:
Stay invested.
Stay diversified.
Stay focused on the long term.
Your financial plan was built to withstand uncertainty.
Because uncertainty is not the exception in markets.
It’s the rule.
The Bottom Line
The world will always produce unsettling headlines.
Conflicts.
Elections.
Economic scares.
Market volatility.
But the evidence is remarkably consistent.
Patient investors who remain disciplined are overwhelmingly rewarded over time.
So while the news cycle may feel turbulent…
Your investment strategy shouldn’t be.
If recent events have raised questions about your portfolio or financial plan, please get in touch with the Oak Four Team. We’re always happy to talk.