In the days since the war between the United States and Iran began, the stock market has followed a familiar historical pattern. It initially fell sharply on the news, then had some fluctuations before recovering slightly.
“The decline in U.S. stocks appears to have reversed in the short term, and that’s not surprising,” Scott Helfstein, head of investment strategy at investment firm GlobalX, wrote in a note earlier this week. “Geopolitical events generally lead to short-term increases in volatility, but markets typically recover losses quickly and tend to rise in the following weeks.”
In fact, since 1979, the S&P 500 index has risen an average of 2.2% in the month following a war, geopolitical event or energy crisis, according to data from the Stock Traders Almanac.
During times of market volatility or geopolitical uncertainty, it can be tempting to pull your money out of the market. After all, even if the market tends to recover in the long run, scary headlines can cause stock prices to fall quickly. Investors don’t have to look too far back to remember when a new set of U.S. tariffs caused a 19% stock market decline in 2025.
However, financial experts generally advise against making major changes to long-term plans based on what’s currently happening.
“It’s very important to continue investing through geopolitical, economic and market turmoil,” Helfstein told CNBC Make It. “The biggest mistake an investor can make is exiting the market, increasing the risk of a rebound or missing out on new highs.”
Why experts say it’s wise to stay invested
Yes, you might be thinking this, but what happens if you have a bad feeling about the market and manage to sell before the stock price plummets?
The answer may protect your portfolio from big losses, but that’s only half the battle. Because you have to think about when to come back. And because the stock market has historically trended upward, the longer you leave your money on the sidelines, the more exposed you are to mathematical risk, experts say.
Consider research by the mutual fund company Hartford Funds. The study found that if a theoretical S&P 500 investor invested $10,000 in 1995 and held it until 2024, he or she would have ended up with a profit of about $224,000. If the same investor missed the 10 most profitable days over the same holding period, the total would drop by 54% to about $103,000. If the best 30 days are missed, the investor is left with $38,000.
Lest you think it’s important to simply avoid investing when stocks are falling, the Hartford Funds study found that 50% of the market’s best days across the sample occurred during bear markets (periods of declines of 20% or more), and 28% occurred in the first two months of a bull market. Before many investors knew the rally was here to stay.
How to avoid overreacting to the news
Now, would a real investor ever sell all of their stock on the same day before buying it back the next day? Probably not. But the data points to a simpler point. To take advantage of a rising market, investors can only win if they keep their money in stocks.
So what do you do when the picture looks bleak? Ryan Detrick, chief market strategist at Carson Group, says, “Ideally, you want to add to your long-term, diversified portfolio when prices are down.”
“The stock market is the only place where things go on sale and people run out of stores screaming,” he says. For those planning to hold for the long term, staying invested when prices are falling is effectively buying stocks at a discount, he added.
“If you have that plan in advance, you know these are solid companies and you can buy them for less now,” he says.
That’s easier said than done when you see big red numbers on your portfolio page and scary headlines on your screen. This is why some professionals recommend doing your best to invest blindfolded.
“Try to pay as little attention as possible on an ongoing basis,” says Christine Benz, director of personal finance and retirement planning at Morningstar. “It puts all these contributions on autopilot.”
Once you’ve set up the right asset mix (which depends on your investment objectives and the timing of your goals), she says, you can safely flow money into your account without worrying about how the next geopolitical or economic event will affect your portfolio.
“Yes, a down market is a great environment if you’re in a position to put in additional capital,” Benz says. “But I think if you set a good target savings rate, have some kind of healthy asset allocation, and then just adjust it from there, you can really set yourself up for success.”
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