What history — from the Korean War to COVID-19 — tells us about investing through crisis.

The headlines this week have been alarming. Escalating military tensions in the Middle East have rattled global markets, pushing the Dow Jones Industrial Average down more than 1,000 points and sending the CBOE Volatility Index sharply higher. For investors watching their portfolios, it is natural to feel the urge to act — to move to the sidelines until the uncertainty clears.

But before reacting, consider what decades of market history actually show about geopolitical crises and long-term investment returns. The data may surprise you.

What Happens to the Stock Market During Geopolitical Crises?

Geopolitical shocks like wars, terrorist attacks, and political upheavals create immediate market volatility. Investors reprice risk quickly, and in the short term, markets often fall sharply. This is expected behavior. Uncertainty is the market's least favorite condition.

However, the critical distinction for long-term investors is between short-term volatility and lasting damage to portfolio value. History shows these are rarely the same thing.

A review of nine major geopolitical crises since the Korean War reveals a consistent pattern:

• The Korean War (1950): S&P 500 returned +11.2% in the following year

• Cuban Missile Crisis (1962): +27.8%

• Six-Day War (1967): +13.0%

• Gulf War (1990): +10.2%

• 9/11 Attacks (2001): -16.8% — the most significant exception

• Iraq Invasion (2003): +26.7%

• Brexit Vote (2016): +19.7%

• COVID-19 (2020): +43.7%

• Ukraine Invasion (2022): -7.4%
  
  

+14.2%: Average S&P 500 1-Year Forward Return After Major Geopolitical Events 

Measured across nine major crises since the Korean War. Source: FactSet Research Systems / Standard & Poor’s.

Why Do Markets Recover After Geopolitical Events?

The resilience of markets in the face of geopolitical turmoil is not accidental. It reflects a fundamental truth about how equity markets work: stock prices are driven by corporate earnings and long-term economic activity, not by political headlines.

Several forces tend to drive post-crisis recoveries:

1. Geopolitical Events Rarely Disrupt Corporate Earnings Long-Term Unless a conflict directly disrupts supply chains or destroys productive capacity at scale, most companies continue to generate revenues and profits. Investors eventually refocus on fundamentals once the initial uncertainty fades.

2. Policy Responses Cushion Shocks Central banks and governments typically respond to crises with supportive monetary and fiscal policy. The extraordinary market recovery following COVID-19 — with the S&P 500 returning +43.7% in the following year — was driven in large part by unprecedented stimulus.

3. Crisis Periods Create Opportunity Sell-offs driven by fear rather than fundamentals can create attractive entry points for long-term investors. As Warren Buffett has long observed, the time to be greedy is often when others are fearful.

4. Diversified Portfolios Are Built for This Well-constructed portfolios include asset classes that behave differently under stress — bonds, commodities, international equities — which helps cushion volatility even when equities decline.

Should Investors Sell During Geopolitical Uncertainty?

This is one of the most common questions we receive during periods of market stress. The honest answer, backed by data: for long-term investors, selling during a geopolitical crisis has historically been the wrong decision.

The challenge is that market recoveries rarely follow a neat, predictable path. Volatility can persist for weeks or months. Sitting in cash while waiting for conditions to stabilize often means missing the sharpest recovery days — which tend to cluster immediately after periods of maximum fear.

Research consistently shows that missing just the ten best trading days in a decade can cut long-term portfolio returns in half. Timing the market around geopolitical events is notoriously difficult even for professional investors.

The evidence strongly favors maintaining a long-term allocation over attempting to time re-entry after geopolitical shocks.

What Are the Real Risks Investors Should Monitor?

Not all geopolitical risks are equal. While the historical average return after crises is strongly positive, two of the nine events in our dataset produced negative one-year returns: the aftermath of 9/11 (-16.8%) and the Ukraine invasion (-7.4%).

The factors that tend to produce deeper or more prolonged market damage include:

• Sustained disruption to global energy supply, as seen in the current Middle East tensions involving the Strait of Hormuz

• Inflationary shocks that constrain central bank policy, limiting their ability to support markets

• Escalation into broader multinational conflicts with significant economic disruption

• Damage to financial system confidence or liquidity

The current situation warrants monitoring, particularly around oil supply dynamics. However, the base case, supported by market history, remains that geopolitical volatility, while uncomfortable, does not typically translate into permanent loss for disciplined, diversified investors.

How Should Investors Respond to Today’s Market Volatility?

At SteelPeak Wealth, our guidance during periods of elevated uncertainty is grounded in the same principles that have guided investors through every major crisis of the last 75 years:

1. Do Not Make Reactive Portfolio Decisions Decisions made under emotional pressure — fear or panic — rarely align with long-term financial goals. Your investment plan was designed with the expectation that volatility would occur.

2. Review Your Risk Tolerance and Time Horizon If the current environment is causing meaningful anxiety, it may be worth a conversation about whether your current allocation matches your actual risk tolerance — not as a reason to sell, but to ensure long-term alignment.

3. Consider Rebalancing Opportunities Market dislocations can create rebalancing opportunities — buying asset classes that have declined relative to your target allocation. This is a disciplined, systematic response to volatility.

4. Focus on What You Can Control You cannot control geopolitical events, oil prices, or market movements. You can control your asset allocation, your savings rate, your tax strategy, and your response to short-term noise.

Frequently Asked Questions About Investing During Geopolitical Crises

How long do stock market downturns from geopolitical events typically last?

Most geopolitical-driven market downturns are relatively short-lived. Research from Carson Group analyzing 40 major geopolitical and historical events over 85 years found that the S&P 500 lost an average of just 0.9% in the first month after such events, but recovered to gain an average of 3.4% over the following six months.

Is it safe to invest during a war or military conflict?

History suggests that staying invested during military conflicts has generally been the prudent course for long-term investors. While short-term volatility is common, markets have recovered from every major conflict in modern history. The 1-year average S&P 500 return following the nine geopolitical crises in our dataset is +14.2%.

What sectors perform well during geopolitical uncertainty?

During geopolitical crises, energy and defense stocks often outperform, as do traditional safe-haven assets including gold, U.S. Treasury bonds, and the U.S. dollar. Consumer staples and utilities tend to be more defensive than cyclical sectors. However, individual sector performance varies significantly by crisis type.

How does oil price volatility affect stock market performance?

Oil price spikes driven by geopolitical disruption can create headwinds for the broader market, particularly if they persist long enough to elevate inflation and constrain central bank policy. The 1973 oil embargo and the current Middle East tensions both illustrate this risk. Energy sector stocks tend to benefit directly from higher oil prices.

What is the best investment strategy during geopolitical uncertainty?

The evidence supports maintaining a diversified, long-term allocation rather than attempting to time the market around geopolitical events. Key strategies include staying invested, using volatility as a rebalancing opportunity, and ensuring your portfolio reflects your actual risk tolerance and time horizon.

The Bottom Line

Geopolitical crises are frightening. Markets react, headlines alarm, and the instinct to take protective action is entirely human. But the historical record is clear: for investors who stay disciplined, maintain diversified portfolios, and resist the impulse to time the market, the long-term outcomes have been strongly positive — even after the most turbulent events of the past 75 years.

The current situation is serious and we are monitoring it closely. But your long-term financial plan was built for exactly these moments. If you have questions or concerns about your portfolio, we encourage you to reach out.

Source: FactSet Research Systems Inc., Standard & Poor’s. Data as of March 6, 2026. Past performance is not indicative of future results. This content is for informational and educational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security. Investors should consider their own objectives, risk tolerance, and time horizon before making investment decisions. SteelPeak Wealth does not guarantee the accuracy or completeness of any information presented herein

SteelPeak Wealth, LLC is an SEC registered investment adviser with its principal place of business in Woodland Hills, California. SteelPeak and its representatives are in compliance with the current registration requirements imposed upon registered investment advisers by those states in which SteelPeak maintains clients. SteelPeak may only transact business in those states in which it is registered or qualifies for an exemption or exclusion from registration requirements. Any subsequent, direct communication by SteelPeak with a prospective client shall be conducted by a representative that is either registered or qualifies for an exemption or exclusion from registration in the state where the prospective client resides. SteelPeak Wealth is not licensed to and does not engage in the practice of rendering legal or tax advice. Any discussion of either is for informational purposes only and you are strongly encouraged to seek appropriate counsel prior to taking action. The material is limited to the dissemination of general information that may not be suitable for everyone and should not be construed as personalized advice of any kind. Furthermore, this material should not be regarded as a complete analysis of the subjects discussed. For additional information about SteelPeak, including fees and services, send for our disclosure statement as set forth on Form ADV from SteelPeak using the contact information herein, or refer to the Investment Adviser Public Disclosure web site (www.adviserinfo.sec.gov). Please read the disclosure statement carefully before you invest or send money.

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. The forecasts or forward-looking statements are based on assumptions, may not materialize, and are subject to revision without notice. Please consult your financial professional for additional information. This content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by SteelPeak to provide information on a topic that may be of interest. All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Investing involves risk, including possible loss of principal. No strategy assures success or protects against loss. To determine what may be appropriate for you, consult with your attorney, accountant, financial or tax advisor prior to investing.