Investing Through Uncertainty: A Century of Market Resilience

As we all know, war's most immediate and devastating toll is human. Behind every market data point and economic indicator are real people's lives lost, families displaced, communities shattered, and futures upended. Like all wars, the conflict between the United States, Israel, and Iran is, above all else, a humanitarian crisis, one that has brought immeasurable suffering to civilians across the region. It is important to hold that reality at the center of any broader analysis.

At the same time, the nature of modern global interconnection means that armed conflict rarely stays contained within its borders. Energy supplies, trade routes, financial markets, and supply chains span the entire world, and when they are disrupted whether by damaged infrastructure, closed waterways, or the uncertainty that war inevitably breeds the economic consequences radiate outward, touching the lives of people far removed from the front lines. The analysis that follows attempts to make sense of those consequences, while recognizing that they are, ultimately, secondary to the human cost that gives rise to them.

When it comes to the impact on the global economy and markets, the history of the markets – through a number conflicts, crises, and disasters – can be a helpful reminder that disciplined investing takes a longer-term view.  

The graph below illustrates the growth of $1 invested in U.S. stocks since 1926, highlighting many major geopolitical events along the way.

In each of these “headline” moments in time, we felt the weight of difficult times shrouded by profound uncertainty around what the future would hold. Markets experienced volatility in the heat of these moments, and as investors, it was easy to feel cautious and concerned. Yet, when we step back and look at the longer-term picture, an important pattern emerges: even in the face of economic and political upheavals, the global equity markets have continued an upward climb.

Despite decades of wars, political tensions, recessions, and other global challenges, the long-term trend of the market has been upward. The growth shown in the chart above demonstrates the resilience of businesses, economies, and financial markets over time.

This, of course, does not mean that markets move in a straight line. Short-term disruptions are a natural part of investing. But history reminds us that part of being human – our understandable fear, emotional reactions, and concerns – can lead us to question what we’re doing. This is why maintaining a disciplined, long-term investment strategy is so important.

Times of uncertainty also reinforce the importance of global diversification. Diversification helps manage risk by ensuring that portfolios are not overly reliant on any single country, region, industry, or asset class.

With acknowledgement of the significant and catastrophic toll wars inflict on people directly, zooming out to the broader global impact, we can see that global markets have continued to grow over time. From an investment perspective, staying disciplined, diversified, and focused on long-term goals remains one of the most effective strategies for navigating uncertain times.