The stock market continues to rise as geopolitical tensions escalate in the Middle East and Europe.

It’s interesting to examine how markets perform historically during major conflicts while tracking their returns over the 1, 3, 6, and 12-month post-event periods.

Source: Here’s How to War-Proof Your Portfolio Amid Mounting Geopolitical Tensions

In 75% of the events, markets posted positive returns, averaging 8.6% post the event. Economic events have a greater impact than geopolitical events – read Global Financial Crisis. If we turn to today’s events, why is this so? My view is that, given the volume of news and the fact that an American President is always on Truth Social, markets and, by implication, investors have become desensitised by the statements and the events themselves. Hence, the heading for this newsletter: ‘This Too Will Pass’. Investors view geopolitical events as transitory and, in the spirit of optimism, look past them.

Below, I’ve posted an extract of the DOW, the US indice celebrating 129 years. It illustrates two learnings: crisis and crises are inevitable because of the human condition, and staying invested pays off. Markets trend upwards over time, and the best businesses become more valuable over time, even during periods of great uncertainty – such as now. Those who stay steadfast and invested are inevitably rewarded.

In a volatile investment environment, it is essential to keep an eye on the long term, while keeping a ‘weather eye‘ on changing circumstances.

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