Steady Oversight and a Disciplined Process
Recent geopolitical developments have understandably raised questions about how global conflicts may affect financial markets. Periods like these can create uncertainty and volatility, and part of our responsibility as your advisors is to watch developments closely while keeping portfolios aligned with long-term objectives.
While headlines can feel unsettling, history shows that markets have navigated wars and geopolitical conflicts many times before. Keeping that historical perspective and remaining committed to a disciplined investment process helps guide decision-making during uncertain periods.
Stock Markets
• In the short term, markets often experience heightened volatility. Uncertainty around trade, energy markets and global supply chains can lead to sharp price swings
• Over the longer term, equity markets have historically recovered and moved higher. Wars can stimulate certain industries such as defense, manufacturing and infrastructure. Governments often implement policies designed to support economic stability and recovery.
Historical perspective and recovery timelines:
• During World War II, U.S. stocks dropped sharply following the attack on Attack on Pearl Harbor in December 1941. The decline was relatively brief; by mid-1942 markets had stabilized, and by 1943 equities were trending higher. The S&P 500 then moved into a multi-year expansion that continued through the post-war economic boom.
• During the Gulf War, the S&P 500 declined roughly 15–17% between July and October 1990 as oil prices spiked and uncertainty increased. Once the U.S.-led coalition began military operations in January 1991, markets recovered quickly. Within about six months of the market low, equities had regained their losses and continued advancing through the early 1990s expansion.
• During the Iraq War, markets had already been under pressure due to the bursting of the tech bubble and broader economic uncertainty. The S&P 500 bottomed in March 2003, almost exactly when the invasion began, and rose more than 25% over the following 12 months. That recovery marked the beginning of a broader bull market that lasted until 2007.
Bond Markets
• Government bonds are often viewed as a “flight to safety” during periods of conflict. When investors seek stability, demand for bonds can increase and yields may decline.
• At the same time, large government spending during wartime can introduce inflation pressures, which may influence interest rates and bond market dynamics.
Our Investment Management Philosophy
Even during uncertain times, our investment decisions remain guided by a disciplined philosophy focused on long-term outcomes rather than short-term headlines. Portfolios are constructed around each client’s goals, risk tolerance, and time horizon, using the information gathered through our discovery process and risk assessment tools.
Risk and return are related and building wealth over time requires staying invested and allowing capital to work through market cycles. Our approach emphasizes time in the market rather than attempting to time short-term movements. Instead of chasing individual “hot” investments or trying to predict market turning points, we focus on disciplined portfolio construction, broad diversification, and strategic allocation.
While geopolitical conflicts can create uncertainty in the short term, history reminds us that markets have faced many similar periods. It is important to remain disciplined in portfolio management, diversification and continue to stay aligned with your long-term financial goals.
Jeremy Heavey
AIF ® , NSSA ® | FINANCIAL ADVISOR
Scott Higgins
AIF ® , CFP ®, CPFA ®, NSSA ® | FINANCIAL ADVISOR
Securities and Investment Advisory Services offered through M Holdings Securities, Inc., a Registered Broker/Dealer and Investment Advisor, Member FINRA/SIPC. Rose Street Advisors, LLC is independently owned and operated. File #5303566
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