Market Commentary: Spring 2026 - Investing Through Fear

What History Tells Us About Markets and Conflict

There are moments when discussing financial markets can feel like the wrong place to begin. The ongoing military conflict involving the United States and Israel in Iran is one of those moments. Whatever views one has on the geopolitical and strategic rationale, the human cost of this conflict is undeniable, and it would feel hollow to open with a discussion of oil prices or market volatility without first acknowledging that. We understand the gravity of this situation carries weight well beyond your portfolio, and we want you to know we are thinking about it the same way you are. That said, part of our responsibility to you is to help you think clearly about your finances when the world makes that difficult. So, let’s do that. 

What Markets Are Telling Us 

The immediate market reaction has been predictable: oil prices are surging, equities have sold off, and investor sentiment has turned sharply negative. This kind of response is rational. Conflict in the Middle East raises real questions about energy supply, regional stability, and the broader global economy. Markets dislike uncertainty, and right now there is plenty of it. 

Looking Back to Look Forward 

We will not speculate as to where this conflict goes from here. What we can do is look at how markets have responded to similar moments, and the record on that is more reassuring than today’s headlines might suggest. 

When Iraq invaded Kuwait in August 1990, the S&P 500 fell roughly 16% over three months. But by the one-year mark from the invasion date, the market had fully recovered and finished up nearly 9%. After September 11th, the market initially dropped approximately 12% in the days following the attacks, then rose more than 21% over the next two and a half months. When the U.S. invaded Iraq in March 2003, markets barely flinched at the outset and went on to gain nearly 27% in the year that followed. 

A broader study of nine major geopolitical crises since the Korean War found that the S&P 500 averaged a one-year forward return of 14.2% following those events. Not every episode resolved quickly or cleanly, but it reflects something consistent: markets are driven by corporate earnings and long-term economic activity, not by headlines. Once a situation shifts from unknown to known - even partially - investors tend to refocus on fundamentals.   

A Word on Oil 

Energy prices deserve specific attention as we are currently experiencing this in our daily lives – especially at the gas pump and grocery store. The Strait of Hormuz carries roughly 20% of the world’s oil supply, so any disruption there gets attention quickly and for good reason. That said, sharp oil price spikes tied to Middle East tensions historically have not been permanent. The 1973 embargo, the Iran-Iraq Tanker War of the ‘80s, the Gulf War, and the 2022 Russia-Ukraine conflict all caused major price surges that eventually eased as supply chains adapted. We’re not predicting the same outcome here – this conflict has its own dynamics. But history does push back against the assumption that today’s prices are the new normal.

The Right Use of Fear 

Fear is not a flaw. When something genuinely serious happens, an anxiety spike is an appropriate response.  But fear is not a good basis for making portfolio decisions. The impulse to sell during a frightening period may feel like taking control, but it typically means locking in losses. Some of the market’s best single-day returns occurred within weeks of its worst, and missing those recoveries can do lasting damage to long-term returns.   

As an investor, a better use of fear can be as a prompt for conversation. If current events are making you question your plan, that’s worth exploring. Moments like these can offer good insight into whether your risk tolerance and time horizon are still accurately reflected in your portfolio allocation. 

Eyes on the Horizon 

Review your plan, not your positions. Ask yourself whether your long-term goals have changed, not whether the market is down this week. For most of our clients, the goals haven’t changed. Your retirement timeline is the same, your income needs are the same, and the financial objectives built into your portfolio remain intact. When those things are still true, the case for staying the course is strong, even when headlines give rise to heightened anxiety. 

If current events are weighing on you, we encourage you to reach out. These conversations are part of what we are here for, and they can prove extremely valuable during times like these.

Additionally published in North Bay Business Journal