Patience over panic: geopolitical shocks
are no match for long-term discipline

Key takeaways:

• While geopolitical shocks can be serious, markets have historically shown strong resilience in their aftermath.
• Emotional decisions during market volatility can be costly—staying invested increases the likelihood of positive long-term returns.

06/25/2025 – Geopolitical events—such as the escalating Israel-Iran conflict and the recent U.S. airstrikes on Iranian nuclear sites—continue to build the “wall of worry” that markets often climb. Headlines tied to these disruptions can overwhelm investor sentiment, stir volatility, and prompt swift reactions in equity markets.

While geopolitical shocks are often serious, markets have historically shown remarkable resilience in their aftermath. Much of this stems from the forward-looking nature of financial markets, which tend to quickly absorb and discount new information.

Geopolitical events can shake investor confidence, but markets usually adjust quickly as they absorb the real economic impact. Attention often shifts back to key drivers, like company earnings, interest rates, and economic growth. That’s why making emotional decisions during periods of volatility can be costly—because the chances of positive returns in the stock market grow the longer you stay invested. While short-term performance can swing widely, the odds of gains improve with time.

While the duration and impact of recent geopolitical events remain uncertain—with oil prices likely a key focus for investors—history suggests that the market’s reaction is often less severe than headlines imply. Although past performance is no guarantee of future results, markets have recovered as the true economic effects of these events become clearer. As the accompanying chart shows, since 1980 the S&P 500^® Index has delivered an average return of over 11% in the 12 months following major geopolitical shocks, highlighting the market’s ability to bounce back.

As challenging as geopolitical events can be, they also present investors with opportunities—to rebalance portfolios, reassess long-term risk tolerance, and ensure allocations remain aligned with their goals. Staying focused on the bigger picture can help turn short-term uncertainty into a long-term strategy.