Heightened bouts of volatility feels urgent in real time. Clients don’t experience markets as smooth, long-term compounding machines; they experience them through sharp drawdowns, rising oil prices, and relentless headlines.
The current Iran conflict has added to that pressure, lifting energy costs and unsettling sentiment.
The task for advisers is to separate what feels dangerous from what actually drives returns.
Right now, the data is clear. The US earnings season is currently underway and expectations are strengthening.
Analysts are looking for roughly 12% year-on-year growth from S&P 500 companies in the first quarter, with some projections moving into the high teens. Revisions have been trending upward, not downward, even as geopolitical risk has intensified. Corporate performance is holding up in an environment that, on the surface, appears hostile.
This gap between perception and reality is where mistakes tend to happen.
Markets are efficient at pricing in shocks. Oil has already adjusted to developments in the Middle East. Risk premiums have moved. Equity markets have experienced volatility, but they have not broken structurally.
Following signs of de-escalation between the US and Iran, the S&P 500 recovered quickly toward pre-conflict levels. Investors are responding to earnings, not reacting blindly to headlines.
History provides a consistent framework for understanding this dynamic.
During the Gulf War in 1990–91, the S&P 500 fell sharply in the early phase of the conflict as uncertainty surged and oil prices spiked.
Once the trajectory of the war became clearer, equities rebounded strongly, finishing the year higher. Investors who reduced exposure during the initial shock faced a rapid recovery they struggled to re-enter.
The 2003 Iraq War followed a similar path. Markets weakened in the run-up to military action, reflecting uncertainty and risk repricing.
When operations began and visibility improved, equities moved higher and entered a sustained period of gains. The pattern repeated: volatility concentrated at the point of maximum uncertainty, followed by recovery driven by fundamentals.
The lesson extends beyond geopolitical conflict. After the September 11 attacks in 2001, US markets closed for several days and then fell sharply on reopening. Within months, much of the decline had been recovered. The initial reaction reflected shock; the recovery reflected economic reality.
The 2008 global financial crisis is often cited as a counterpoint, yet even there the principle holds. Investors who exited during the most acute phase of the crisis locked in losses and frequently failed to participate fully in the recovery that followed. From the March 2009 lows, the S&P 500 began a multi-year expansion. Missing the early stages of that rebound had lasting consequences for portfolio performance.
The pandemic in 2020 offers the clearest modern example. Markets fell at record speed as economies shut down and uncertainty reached extreme levels. Many investors moved to cash. Within weeks, equities began to recover, led by sectors tied to digital infrastructure, software, and advanced computing.
By the end of the year, markets had not only recovered but moved significantly higher. The strongest gains occurred while uncertainty remained elevated.
Each of these episodes reinforces the same point. The most damaging decisions are often made during periods of maximum discomfort.
The current environment adds another dimension that strengthens the case for staying invested: structural growth in AI and tech.
Capital expenditure across data centres, semiconductors, and cloud infrastructure is accelerating. Companies are committing vast resources to secure leadership in next-generation systems. Demand for compute power continues to exceed supply, supporting sustained growth across the entire ecosystem.
Global semiconductor revenues are expected to surpass $700 billion, with AI-related demand driving the fastest expansion.
These are foundational shifts in how businesses operate, compete, and scale. Companies at the centre of this transformation are increasing investment, not delaying it.
As such, and as history proven time and again, it’s more of a risk not be invested in times of increased market turbulence. Those best positioned are those who remain invested, but nimble. This should be top priority when advisers speak with clients right now.
Related: Advisor Movement Is Accelerating, but Most Are Missing the Real Signal