It's easy to get anxious about money.
In times of geopolitical uncertainty, that worry can easily increase. Headlines about military movement and missiles, death and destruction, are hard and heart-wrenching to watch.
By the time you are reading this, the hostilities between Israel and Iran may have expanded or shrunk. The news changes so rapidly nowadays on just about everything from the momentous to the mundane that it's hard to keep up.
We need to know how to go about our lives in a world where war and crisis happen. And as a wealth advisor, one area of my focus must be on the impact of such things on investors.
JP Morgan did some research along with Ned Davis comparing the stock market's performance over 3-month, 6-month, and 12-month periods after a significant global event and without a notably serious event since Germany's invasion of France in 1940.
Here is what they found:
We conclude that in the three months after an event the market underperforms, on average, but—this is key—six-month and 12-month subsequent returns are identical. When you consider the average equity investor experience, it's as though the event never happened.¹
How can this be? DataTrek gives one key reason: “The bottom line is that markets discount outcomes, not headlines.”2
Right or wrong, market prices have a way of focusing on the future not the present.
Horrific headlines don’t always make for horrific markets. That is not an easy thing to swallow, but it is an important principle for investors.
This serves as another reminder that investment portfolios should be governed by your time horizon and risk tolerance, not by the ever-changing world.
Market declines can occur for a number of reasons, which is why not many can sleep with 100% allocations to stocks. The important thing is to do your best to have the diversification you need to achieve your goals.
Let's rephrase that: the important thing is to do your best to have the diversification you can handle to achieve your goals.
This takes us right back to anxiety.
Worrying about your own financial world, let alone all the potential worries on earth, is challenging enough. Learning to manage yourself, which may require hiring someone to help you, precedes managing an investment portfolio effectively.
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Source:
1. Quote and chart taken from “How do geopolitical shocks impact markets?”, May 24, 2024. Accessed online: https://privatebank.jpmorgan.com/nam/en/insights/markets-and-investing/how-do-geopolitical-shocks-impact-markets
2. Posted on X June 18, 2025. Accessed online: https://x.com/DataTrekMB/status/1935418454011691223