March Market Commentary: Geopolitical Storms

The geopolitical storms have been gathering. The sun appears to be setting on the notion of globalism. Tribalism is on the rise as nations come to understand that relying on other countries for trade, production, commodities, and labor in a time of increasing hostility exposes economic vulnerabilities. The “great reshoring” is a direct response to this realization. Add to this the ever-present threat posed by clashing ideologies. We have been at odds with most of the Muslim world for many decades now, with Iran a potential foe ever since that country’s 1979 Islamic revolution. Iran’s nuclear ambitions clash directly with the United States’ insistence that Iran never be allowed to have a nuclear weapon. The threat of conflict over this became reality last weekend.

Markets, not surprisingly, are down this morning. Some may be surprised that the selling is not more intense. After all, any conflict in the Middle East risks becoming major. Iran has attacked U.S. assets in multiple Middle Eastern countries, potentially alienating those with whom it shares an ideological connection. Yet, the stock market seems to be taking this in stride. This outbreak of hostilities is no surprise. The White House has signaled for weeks its intentions if negotiations failed. Investors have been in “risk-off” mode for most of 2026. Perhaps the selling that was attributed to A.I. fears can also be blamed on repositioning due to rising geopolitical fears.

So, how do we react this? Fortunately, history gives us some guidance. Every conflict is different and this is no exception, but absent nuclear proliferation I believe that the markets will respond as they historically always have. Conflict provides opportunity. Look at this graph, courtesy of Ryan Detrick and Carson Investment Research:

According to this list, which is rather extensive, markets have responded to these geopolitical shocks with higher prices a year later about 2/3 of the time.

Here is another chart, courtesy of First Trust.

If you try hard enough you can always find a reason not to invest. Worries always overhang the stock market. Successful investors stay committed. Successful investors know that fear creates opportunity and greed creates risk. Successful investors understand that “time in the market is more important than timing the market.”

We adjust our positioning to account for sentiment shifts, but we will not abandon our long-term view that asset prices rise over time and reward those who remain patient and committed.

Seward

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