A Better and Healthier You - Market Moves in Times of War
By Scott Voigt, CFA, CPA, CFP® Five Points Resident
Hello friends of Five Points! I hope everyone is enjoying the warmer weather. I know that these times are busy with the end of the school year and upcoming summer trips. As I write to you, the conflict with Iran has been dominating the news. I have had several clients reach out expressing concerns about whether or not to do anything in response to the market volatility. So I thought I would share some thoughts on market moves in times of war.
Wars such as the one unfolding in Iran are always disturbing. For investors, there’s additional concern over whether these conflicts will spill over into their investment performance. I know you have heard me say this before, but I am going to say it again -- it’s important for investors to be cautious about making asset allocation changes in response to such events.
Markets are forward-looking. Just a quick refresher, this means that stock prices reflect the collective expectation of future earnings, economic conditions, risks, etc. Basically, the market is incredibly efficient at pricing in every bit of information that is available! Because of this, that is why there is sometimes a disconnect between prices and current data. A market can drop even when a company reports strong earnings, if investors expect weak growth in the future. Conversely, a market can rally before a recession officially ends.
When unexpected developments arise that investors deem to be poor for markets, markets often drop. But the flip side is markets always set prices for positive expected returns. Once the news gets reflected in market prices, investors can still expect positive returns even amid worrisome circumstances.
This is borne out in historical stock returns. Global equity markets have continued an upward climb even in the face of economic and political upheavals. We don’t have to look far for illustrative examples. During the past few years, stock markets have had positive returns despite multiple wars being fought around the world.
This is not to trivialize the destruction wars bring and their impact on geopolitical risks. But history suggests investors may not help themselves by divesting from stocks. For long-term investors, the best bet is usually to stay the course!
Exhibit 1
Markets Have Rewarded Discipine
Growth of $1 – MSCI World Index (net dividends), 1970-2025
Source: Dimensional Fund Advisors. Past performance is not a guarantee of future results. Actual investments returns may be lower.
As always, please do not hesitate to reach out! I can be reached at svoigt@verisail.com if you are interested in learning more and how it may affect your financial situation.
NAVIGATING TODAY AND TOMORROW, TOGETHER.
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Scott, his wife Lindsay, and their son Landon live in Five Points. They enjoy attending UGA football games, traveling, and spending time in the mountains.
Verisail Partners is a fee-only financial planning firm serving individuals, families, and business owners. Verisail Partners is a Georgia domiciled investment advisor firm registered pursuant to laws and regulations of the U.S. Securities and Exchange Commission.
