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As the Iran War roils global markets, many investors are worried about the impact on their portfolios. A closer look at history, however, suggests that they can be cautiously confident. We review the lessons from the past and explore the possible paths ahead.
Long Story Short: Risk Assets Rise (Eventually)
It’s hard to believe this when you’re in the thick of it. But most military conflicts have only a short-term impact on financial markets. Risk assets, such as equities, ultimately prevail. On average, it takes less than two weeks (13 days) for the S&P 500 index to bottom after a geopolitical crisis and less than a month (28 days) to recover, according to this tally put together by RBC Wealth Management. The average fall from peak to trough is only about 6%. By design, markets are forward-looking. They try to price the future value of assets. So, once there are…
