economy
March 4, 2026
Iran war and your portfolio: The historical stock market patterns investors should know
The stock market had a wild ride on Tuesday, but history suggests that's par for the course and may not be an indication of worse to come.
TL;DR
- The stock market saw significant drops on Tuesday due to escalating Middle East tensions, with major indices closing down.
- Historical analysis of 17 geopolitical shocks since 1939 shows an average one-week drop of 1.09% in the S&P 500, followed by an average 2.92% gain 12 months later.
- Despite initial volatility, experts advise investors to stick to their long-term strategies and not make rash decisions based on short-term market fluctuations.
- Recent events like the Russia-Ukraine invasion saw temporary dips, but the S&P 500 gained in the first week, although it was down a year later.
- Market volatility can be jarring, but history suggests recovery; advisors recommend re-evaluating risk tolerance if extreme nervousness persists.
- Missing the market's best days, even during a bear market, can significantly reduce long-term returns.
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