Historically speaking this is the path that markets tend to take when we are in time of geopolitical risk/war

1. Initial drop when the event happens
2. Stabilization as uncertainty declines
3. Recovery within months to a year in most cases

S&P 500 Performance After Major Geopolitical Events

Event	Immediate Reaction	12-Month Return
Iraq invades Kuwait (1990)	15% drawdown before war	Strong recovery after war began
9/11 Terror Attacks (2001)	5% drawdown first day	+2.7% after 3 years
Iraq War Begins (2003)	Market actually rose	+29% after 12 months
Crimea Annexation (2014)	Minimal reaction	+14.7% after 12 months
Iran tensions (2020)	Small decline	+17.6% after 12 months

“Does Geopolitical Crisis Equal Market Crisis?” T. Rowe Price Insights.
Accessed March 9, 2026.
https://www.troweprice.com/en/us/insights/does-geopolitical-crisis-equal-market-crisis

What the Long-Term Data Shows

Research across post-WWII conflicts shows:

• Stocks were positive 1 year later in ~73% of geopolitical conflicts
• Drawdowns tend to be short-lived
• Markets usually recover once the uncertainty becomes clearer

Hartford Funds Investment Insights Team.
“Military Conflicts May Rattle Markets, but Not for Long.” Hartford Funds.
Accessed March 9, 2026.
https://www.hartfordfunds.com/practice-management/client-conversations/managing-volatility/military-conflicts-may-rattle-markets-but-not-for-long.html

Typical pattern:

• Week 1–2: volatility spike
• 1–3 months: stabilization
• 6–12 months: recovery and often positive returns

One Important Exception

Not every conflict is harmless for markets. The two biggest historical market declines tied to wars were:

S&P 500 Responses to Military Conflicts Since World War II

Event	Start Date	Trading Days to Trough	% Decline to Trough	Trading Days to Recover
N. Korea invades S. Korea	June 25, 1950	15	-12.9%	56
U.S. spy plane shot down in USSR	May 7, 1960	2	-0.6%	4
Bay of Pigs invasion	April 15, 1961	6	-3.0%	14
Cuban Missile Crisis	Oct. 16, 1962	6	-6.3%	13
Gulf of Tonkin Incident (Vietnam)	Aug. 2, 1964	4	-2.2%	29
Lead-up to Six-Day War	May 14, 1967	15	-5.6%	20
Tet Offensive (Vietnam)	Jan. 29, 1968	25	-6.0%	46
Cambodian Campaign (Vietnam)	May 1, 1970	18	-14.9%	86
Yom Kippur War / Arab Oil Embargo	Oct. 6, 1973	42	-16.1%	~6 Years
Soviet-Afghan War	Dec. 24, 1979	7	-2.3%	10
Intervention in Grenada	Oct. 25, 1983	11	-2.8%	15
Lead-up to Panama Intervention	Dec. 15, 1989	2	-2.2%	8
Iraq invades Kuwait	Aug. 2, 1990	50	-15.9%	131
Lead-up to Gulf War	Jan. 1, 1991	6	-5.7%	13
Intervention in Yugoslavia	Mar. 24, 1999	3	-4.1%	11
U.S. spy plane captured in China	Apr. 1, 2001	3	-4.9%	7
War in Afghanistan	Oct. 7, 2001	1	-0.8%	3
Lead-up to Iraq War	Feb. 5, 2003	24	-5.6%	28
Russia invasion of Ukraine	Feb. 11, 2022	17	-7.4%	27

Oil Shock Comparison – 1973 vs 2022

Category	1973 Arab Oil Embargo	2022 Russia–Ukraine Oil Shock
Oil Price Spike	Oil prices quadrupled from ~$3 to ~$12 per barrel	WTI crude rose above $90 for six months, peaking near $124
Supply Impact	Major supply disruption due to OPEC embargo	Supply largely rerouted rather than removed
U.S. Energy Position	U.S. heavily dependent on imported oil	U.S. one of the largest oil producers in the world
Market Flexibility	Limited global trading networks	Global markets quickly redirected Russian oil to Asia
Geographic Impact	Global economic impact	Europe heavily impacted; North America less affected
Economic Sensitivity	Economy highly dependent on oil	Economy more energy efficient
Policy Environment	Policy mistakes worsened inflation	Central banks reacted faster to inflation risks
Corporate Earnings	Many businesses struggled due to higher energy costs	Energy sector profits increased, supporting earnings
Stock Market Impact	S&P 500 took ~6 years to recover	Market selloff was shorter and less severe
Investor Sentiment	Many investors abandoned equities	Investors remained invested despite volatility

RBC Wealth Management.
“Then and Now: Market Reactions to Military Conflicts and What They Mean Today.” RBC Wealth Management Perspectives.
Accessed March 9, 2026.
https://us.rbcwealthmanagement.com/craig.redcay/blog/5392973-Then-and-now-Market-reactions-to-military-conflicts-and-what-they-mean-today

Takeaway (my opinion)

While geopolitical conflicts understandably create concern and short-term market volatility, today’s energy landscape is fundamentally different from the environment that existed during the 1973 oil crisis.

The United States is now the largest oil producer in the world, and the shale revolution has dramatically increased global supply. North America—particularly the U.S. and Canada—produces a significant portion of its own energy, reducing dependence on foreign producers and making supply disruptions less likely to create the type of systemic shock seen in the 1970s.

In addition, the Strategic Petroleum Reserve gives policymakers a tool that did not meaningfully exist during that period. Governments now have the ability to release oil into the market to help stabilize supply during times of disruption.

History also provides an important reminder for investors. While geopolitical events can create short-term volatility, markets have typically recovered relatively quickly once uncertainty begins to fade. In many cases, periods of heightened concern have ultimately proven to be temporary interruptions within much longer-term economic and market growth trends.

For long-term investors, maintaining discipline during uncertain periods is often the most important decision. Markets will always face geopolitical challenges, but the long-term trajectory of economic growth, innovation, and corporate earnings has historically proven far more powerful than temporary disruptions.

Philip Lockwood | Founder + Managing Partner

Address: 1501 Ingersoll Ave. Suite 201 Des Moines, IA 50309 Phone: 515-274-8006

Email: Plockwood@parklandrep.com Website: Lockwood Financial Strategies   Securities offered through Parkland Securities, LLC, member FINRA (FINRA.org) and SIPC (SIPC.org). Investment Advisory services offered through SPC, a Registered Investment Advisor. Lockwood Financial Strategies, LLC is independent of Parkland Securities, LLC and SPC