Selloff then recovery is a common pattern in past crises
Equity markets have moved in a familiar rhythm since the start of the U.S. Iran war: an initial drop, choppy trading, then a partial recovery. Investment strategists say the sequence fits a long-running historical template in which geopolitical headlines cause short bursts of risk aversion, but do not always alter the longer trajectory of corporate earnings and economic activity.
Scott Helfstein, head of investment strategy at Global X, wrote in a note this week that the fast reversal in U.S. equities “makes sense,” arguing that geopolitics typically drives brief periods of heightened volatility while markets often recover and move higher in subsequent weeks. Data cited from the Stock Trader’s Almanac shows the S and P 500 has risen an average of 2.2% in the month following wars, geopolitical events and energy crises since 1979.
The headline takeaway is not that markets are immune to conflict, but that risk repricing can be concentrated in the early stage of a shock. As uncertainty settles into a range of outcomes, investors often shift from selling first and asking questions later to reassessing what, if anything, has changed in the underlying outlook.
Why market timing can backfire even if the fear feels rational
Big geopolitical events can tempt investors to cut exposure quickly, especially when memories of recent drawdowns are still fresh. The text points to 2025, when a wave of new U.S. tariffs coincided with a 19% stock market decline. Episodes like that reinforce a common instinct: protect capital first, evaluate later.
Market professionals generally warn that acting on that instinct can create a second, harder problem. Selling can limit losses, but the strategy only works if investors also manage to buy back in before rebounds. Because markets have historically trended upward over time, staying out for too long can mathematically erode outcomes, according to the experts referenced.
Research from Hartford Funds cited in the text illustrates the point using a long holding period. A hypothetical investor who put $10,000 into the S and P 500 in 1995 and held through 2024 would have ended with about $224,000. If that investor missed the 10 best days, the result falls to about $103,000, a drop of roughly 54%. Missing the best 30 days reduces the ending value to about $38,000.
The timing challenge is compounded by when strong days tend to occur. Hartford’s analysis found that about 50% of the market’s best days in the sample happened during bear markets, and 28% occurred in the first two months of a bull market, before many investors recognize that a sustained turn may be underway.
Staying invested and using structure to reduce reaction risk
Helfstein told CNBC Make It that remaining invested through disruptions is important because stepping aside increases the risk of missing rebounds or new highs. The broader message is that long-term plans tend to work best when they are not repeatedly rewritten in response to breaking news.
Some strategists argue that volatility can be treated as an input rather than a trigger. Ryan Detrick, chief market strategist at the Carson Group, said investors who intend to hold for long periods can benefit from continuing to invest during down moves, effectively buying at lower prices. He described the stock market as one of the few places where assets go on sale and people rush to exit, adding that having a plan in advance can make it easier to view declines as an opportunity rather than a threat.
Automation, allocation and ignoring noise
Another theme in the guidance is reducing the opportunity to overreact. Christine Benz, director of personal finance and retirement planning at Morningstar, said investors should try to pay as little attention as possible on an ongoing basis. Her suggested method is to keep contributions on autopilot, allowing money to flow into accounts without constant decision-making.
Benz said that once an appropriate asset mix is in place, tailored to objectives and time horizon, investors can let the plan run while periodic rebalancing and disciplined saving do much of the work. She added that down markets can be a good environment to deploy additional funds when possible, but emphasized that the foundation is setting a sensible savings rate and a reasonable allocation, then tuning out the noise.
The overall message from the experts cited is that geopolitical risk can create sharper short-term moves, but long-term results often hinge less on predicting the next headline and more on maintaining exposure, controlling behavior and keeping a consistent process in place.
