Market volatility, geopolitical events, and why the long term still wins
27th March 2026
Recent developments in the Middle East have triggered a noticeable increase in market volatility. Over the past week and month, global equity markets have declined across most regions, while oil prices have moved sharply higher in response to supply concerns.
This type of environment tends to generate uncertainty. Headlines become more intense, narratives more dramatic, and the temptation to “do something” with portfolios increases.
However, as is often the case in investing, the most important perspective is not what is happening now, but how similar situations have played out over time.
This blog expands upon our client newsletter that went out earlier this week.
This type of environment tends to generate uncertainty. Headlines become more intense, narratives more dramatic, and the temptation to “do something” with portfolios increases.
However, as is often the case in investing, the most important perspective is not what is happening now, but how similar situations have played out over time.
This blog expands upon our client newsletter that went out earlier this week.
Markets have seen this before
Financial markets have faced no shortage of geopolitical shocks over the past century. Wars, crises and global conflicts have repeatedly created uncertainty, often accompanied by sharp short-term declines.
Each of these events felt significant at the time. Many created sharp market reactions. Some led to sustained periods of volatility.
Yet when viewed over decades, the long-term trend remains clear. Markets have continued to grow.
The key point is not that markets ignore these events. It is that they absorb them. Over time, earnings, innovation, productivity and economic expansion have outweighed even the most severe geopolitical disruptions.
Financial markets have faced no shortage of geopolitical shocks over the past century. Wars, crises and global conflicts have repeatedly created uncertainty, often accompanied by sharp short-term declines.
Each of these events felt significant at the time. Many created sharp market reactions. Some led to sustained periods of volatility.
Yet when viewed over decades, the long-term trend remains clear. Markets have continued to grow.
The key point is not that markets ignore these events. It is that they absorb them. Over time, earnings, innovation, productivity and economic expansion have outweighed even the most severe geopolitical disruptions.
Volatility is part of the process, not a disruption to it
A common misconception is that market declines are abnormal events that interrupt the “normal” functioning of markets. In reality, they are embedded within the structure of how markets operate.
The chart above shows multiple bear markets across decades. Some are sharp and sudden, others more prolonged. In isolation, each one can feel like a meaningful break in trend.
But when viewed as part of a continuous cycle, a different picture emerges. Periods of decline are relatively short compared to the duration and scale of the growth phases that follow.
This is the fundamental trade-off in investing. Volatility is the price paid for long-term returns. Attempting to avoid it entirely typically means sacrificing those returns.
A common misconception is that market declines are abnormal events that interrupt the “normal” functioning of markets. In reality, they are embedded within the structure of how markets operate.
The chart above shows multiple bear markets across decades. Some are sharp and sudden, others more prolonged. In isolation, each one can feel like a meaningful break in trend.
But when viewed as part of a continuous cycle, a different picture emerges. Periods of decline are relatively short compared to the duration and scale of the growth phases that follow.
This is the fundamental trade-off in investing. Volatility is the price paid for long-term returns. Attempting to avoid it entirely typically means sacrificing those returns.
The real risk is missing the recovery
During periods of uncertainty, the natural response is often to step back and wait for clarity. It feels rational. It feels controlled.
However, the data above highlights why this approach is problematic.
A significant proportion of the best days in markets occur during periods of heightened volatility, often within bear markets or in the early stages of recovery. These are not periods when confidence is high. In many cases, they occur when sentiment is at its weakest.
The impact of missing just a handful of these days is substantial. Long-term outcomes are materially reduced, even if the majority of the investment period remains intact.
This creates a structural challenge. Successfully timing the market requires getting two decisions right. When to exit, and when to re-enter. Missing either side of that equation can be costly.
During periods of uncertainty, the natural response is often to step back and wait for clarity. It feels rational. It feels controlled.
However, the data above highlights why this approach is problematic.
A significant proportion of the best days in markets occur during periods of heightened volatility, often within bear markets or in the early stages of recovery. These are not periods when confidence is high. In many cases, they occur when sentiment is at its weakest.
The impact of missing just a handful of these days is substantial. Long-term outcomes are materially reduced, even if the majority of the investment period remains intact.
This creates a structural challenge. Successfully timing the market requires getting two decisions right. When to exit, and when to re-enter. Missing either side of that equation can be costly.
What current data is telling us
Recent data shows broad declines across global indices, with most equity markets down in the region of 5% to 10% over the past month. This reflects the global nature of the current uncertainty rather than a single regional issue.
At the same time, oil has risen significantly, driven by concerns around supply disruption.
This divergence is important. Different asset classes respond differently to the same event. Equities may fall as uncertainty increases. Commodities such as oil may rise. Bonds may respond based on inflation expectations and interest rate outlooks.
This is precisely why diversification is central to portfolio construction. A well-structured portfolio is designed to balance these differing behaviours rather than rely on any single outcome.
What matters during periods like this
When markets become volatile, attention naturally shifts towards short-term performance. Daily movements, headlines and commentary begin to dominate decision-making.
However, the principles that underpin successful investing do not change.
Markets have consistently recovered from geopolitical shocks over time
Bear markets are typically shorter than periods of expansion
Strong recovery periods often begin when sentiment is weakest
Missing key recovery days can significantly reduce long-term returns
Short-term volatility is not a signal that something is broken. It is a normal and necessary component of how markets function.
Staying aligned with the plan
For investors with a clear financial plan in place, periods like this should not require a change in direction.
Portfolios are constructed with the expectation that volatility will occur. Asset allocation, risk levels and time horizons are all designed with this in mind.
The challenge is not predicting events or reacting to headlines. It is maintaining discipline and remaining aligned with a long-term strategy.
This is where the real value of financial planning lies. Not in predicting short-term movements, but in ensuring that decisions remain consistent with long-term objectives.
Final thoughts
Geopolitical events will continue to occur. Markets will continue to react.
What history shows consistently is that these events, while impactful in the short term, have not prevented long-term market growth.
The role of a well-constructed financial plan is not to eliminate volatility, but to ensure that it does not derail long-term objectives.
Speak to us
If recent market movements have raised questions about your portfolio, your positioning, or your broader financial plan, we are available to discuss this with you.
A short conversation can provide clarity and reassurance, particularly during periods like this.
Recent data shows broad declines across global indices, with most equity markets down in the region of 5% to 10% over the past month. This reflects the global nature of the current uncertainty rather than a single regional issue.
At the same time, oil has risen significantly, driven by concerns around supply disruption.
This divergence is important. Different asset classes respond differently to the same event. Equities may fall as uncertainty increases. Commodities such as oil may rise. Bonds may respond based on inflation expectations and interest rate outlooks.
This is precisely why diversification is central to portfolio construction. A well-structured portfolio is designed to balance these differing behaviours rather than rely on any single outcome.
What matters during periods like this
When markets become volatile, attention naturally shifts towards short-term performance. Daily movements, headlines and commentary begin to dominate decision-making.
However, the principles that underpin successful investing do not change.
Markets have consistently recovered from geopolitical shocks over time
Bear markets are typically shorter than periods of expansion
Strong recovery periods often begin when sentiment is weakest
Missing key recovery days can significantly reduce long-term returns
Short-term volatility is not a signal that something is broken. It is a normal and necessary component of how markets function.
Staying aligned with the plan
For investors with a clear financial plan in place, periods like this should not require a change in direction.
Portfolios are constructed with the expectation that volatility will occur. Asset allocation, risk levels and time horizons are all designed with this in mind.
The challenge is not predicting events or reacting to headlines. It is maintaining discipline and remaining aligned with a long-term strategy.
This is where the real value of financial planning lies. Not in predicting short-term movements, but in ensuring that decisions remain consistent with long-term objectives.
Final thoughts
Geopolitical events will continue to occur. Markets will continue to react.
What history shows consistently is that these events, while impactful in the short term, have not prevented long-term market growth.
The role of a well-constructed financial plan is not to eliminate volatility, but to ensure that it does not derail long-term objectives.
Speak to us
If recent market movements have raised questions about your portfolio, your positioning, or your broader financial plan, we are available to discuss this with you.
A short conversation can provide clarity and reassurance, particularly during periods like this.
