Steady Through the Storm: Finding Calm Amid Global Tensions

Global Tensions  – The news has been heavy lately. Images of missiles streaking across Middle Eastern skies, families fleeing Tehran, and headlines warning of war have left many of us shaken. After a surprise Israeli strike on Iranian nuclear and military targets, Iran’s retaliatory missile attacks have escalated tensions. Caught in the middle are countless civilians—families displaced, lives upended. The human toll is heartbreaking, and it’s impossible to overstate its importance.

As we process the gravity of these events, many of us are also grappling with personal concerns. I’ve been hearing from people worried about what this means for their financial future. It’s natural to feel uneasy when global crises dominate the news, especially when markets react so sharply. Stocks have taken a hit, oil prices have spiked, and gold is soaring as investors seek safety. Wall Street is bracing for more volatility, and it’s easy to wonder: What does this mean for me?

While the human cost remains our priority, I want to address the financial uncertainty many are feeling. Let’s take a step back, look at the bigger picture, and find some perspective.

The Oil Factor: A Familiar Story with a Modern Twist

One of the biggest concerns right now is oil. A huge chunk of the world’s supply flows through the Strait of Hormuz, a narrow channel off Iran’s southern coast. If Iran disrupts this critical route, energy prices could skyrocket. We’ve seen this movie before—think back to the 1970s, when a Middle East oil shock triggered double-digit inflation and a brutal market downturn.

But here’s the thing: today’s world is different. The U.S. is now a major energy exporter, and global supply chains are more diversified. Markets have more tools to adapt, from alternative energy sources to sophisticated financial instruments. While a disruption would sting, the global economy is better equipped to handle it than it was decades ago.

What History Tells Us About Crises and Markets

When headlines scream crisis, it’s hard not to feel rattled. But history offers some reassuring perspective. Analysts at J.P. Morgan recently studied over 80 years of geopolitical crises and their impact on markets. Their findings? In the first three months after a crisis, markets often dip. But within six to twelve months, returns typically recover, aligning with long-term averages.

Think of it like a smoke alarm going off because you burned your bagel. It’s loud, jarring, and grabs your attention—but it doesn’t mean your kitchen’s on fire. Geopolitical events tend to trigger sharp, short-term market reactions, but they don’t usually derail long-term growth.

Of course, history isn’t a crystal ball. No one can predict exactly how this situation will unfold or how markets will respond. But the data reminds us that panic rarely pays off.

Steady Through the Storm: Finding Calm Amid Global Tensions

What Drives Long-Term Success?

If market dips from crises are often temporary, what does drive long-term returns? Here are a few key factors:

• Earnings: When companies grow their profits, their stock prices tend to follow. Last quarter, S&P 500 companies reported a 12% jump in earnings compared to the previous year. That’s a solid sign of corporate resilience.
• Consumer Confidence: When people feel secure about their jobs and finances, they spend more, fueling businesses and the economy. Lately, consumer confidence has been trending upward, giving markets a boost.
• Interest Rates: High rates can slow growth, but stable or falling rates create room for companies and consumers to thrive. Right now, rates are holding steady, which is encouraging.
• Inflation: Runaway inflation hurts everyone, but when it’s under control, it supports growth. The good news? Inflation has cooled significantly since the pandemic highs, and recent data suggests prices are stabilizing.

Building a Portfolio for Moments Like These

Events like these weigh on us in two ways: as human beings concerned about global stability and as investors worried about our financial future. The good news? A well-built portfolio is designed to weather storms like this.

In any crisis, there are winners and losers in the market. Some companies will struggle, while others will find opportunities to shine. A strong portfolio is both defensive—to shield against risks—and opportunistic, positioned to capture growth when markets recover. This balance is key to bouncing back quickly and achieving long-term success.

If you’re nearing retirement, this is especially critical. A big loss in the “retirement red zone” (the 5-10 years before and after retirement) could throw your plans off track. History suggests markets often recover, but nothing is guaranteed. That’s why we focus on managing risks and protecting your portfolio, so you can focus on what matters most.

Let’s Talk It Through

If you’re feeling uncertain—whether about the world, your finances, or both—know that you’re not alone. We’re here to help you navigate these turbulent times. Let’s talk through your concerns, and make sure your plan is ready for whatever comes next. Together, we can find balance and keep your financial future on track.