When Geopolitics Moves the Headlines, Should Investors Move Their Portfolios?

Wars and geopolitical conflicts are always unsettling. The current conflict involving Iran is no exception. Beyond the humanitarian impact, many investors naturally wonder what events like these mean for their portfolios and whether they should make changes.

History suggests reacting to headlines is rarely the best approach.

Markets Price In New Information Quickly

Financial markets are forward-looking. When unexpected events occur, prices often adjust rapidly as investors incorporate the new information into expectations for the future.

Once that repricing occurs, markets still move forward based on the expectation of positive long-term returns. Even during periods of uncertainty, the underlying engine of global economic growth continues.

What History Shows

The chart above helps illustrate an important point. It tracks the growth of $1 invested in global markets since 1970 while marking many of the major events investors worried about along the way.

Along that path were numerous disruptions, including:

• Oil embargoes and inflation spikes in the 1970s
• The Black Monday crash in 1987
• The dot-com crash and 9/11 in the early 2000s
• The Global Financial Crisis in 2008
• COVID-19 in 2020
• Multiple wars and geopolitical conflicts

Despite these challenges, global markets have continued to trend upward over the long term.

The Cost of Reacting Can Be High

Making allocation changes during times of fear creates another difficult decision: determining when to get back in.

Investors who move to cash often wait for clarity or stability before reinvesting. By the time the environment feels comfortable again, markets may have already recovered significantly, which can make it difficult to capture the long-term growth they were originally invested for.

A Disciplined Approach Matters Most

This isn’t meant to minimize the seriousness of global conflicts or their real-world consequences. But when it comes to long-term investing, history consistently reinforces a key principle: staying disciplined tends to be more effective than reacting to short-term uncertainty.

For long-term investors, maintaining diversification and sticking to a well-constructed plan is usually the most reliable path forward.

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