Markets have encountered any number of shocks in the past 12 months, including the imposition of sweeping tariffs and the forceful removal of Venezuela’s president. But from the start, the Iran war tested investor resolve.

The sudden airstrikes that opened the conflict on February 28 sent indices reeling and oil prices soaring. The fighting damaged petroleum production and transport infrastructure. Iran’s blockade of the Strait of Hormuz, the major shipping route that abuts its southern border, threw the global oil market into particular chaos. Not surprisingly, gas prices jumped in the U.S., a feared front-runner to higher inflation, slower consumer spending and stunted economic growth.

Times like these can be unnerving for investors, partly because they raise uncertainty over how long a disruption might last, whether it might flare again and how much that might impinge on markets.

The natural impulse during geopolitical strife can be to alter a wealth plan on the assumption that long-term conditions have changed. But it’s essential to put volatility in historical context. Quite frankly, this isn’t the first time external turmoil has caused markets to miss a step, and it almost certainly won’t be the last. Nevertheless, markets have rebounded and gone on to new highs in every instance thus far.

“There’s always something to worry about in the economy, politics or the world at large,” says Capital Group Private Client Services portfolio specialist Ed Gonzalez. “In just the past 15 years, we’ve lived through the European debt crisis and the COVID pandemic. Yet, over that period, international stocks returned more than 9% a year on average.*”

Of course, past events don’t predict the future. Still, history can inform our sense of how markets might react to recent events, including rocketing oil prices. A Capital Group analysis of 10 energy shocks associated with geopolitical events since 1973 showed that oil prices have tended to stabilize near or below precrisis levels within 180 days. That was true for relatively short-lived crises, such as the Gulf War in 1990, and for yearslong upheavals, such as the ongoing Russian invasion of Ukraine that began in February 2022.

Additionally, markets were often quick to rebound after oil supply disruptions. A separate analysis of the S&P 500 showed that, across seven events that affected oil prices since 1990, U.S. stocks grew an average of 12% a year after the inciting incident. Even more profoundly, after two years the index had erased its losses in each instance, sporting average cumulative growth of 32.3%.

Beyond these, it’s also crucial to understand the general risks associated with attempting to time the market. Selling after a dip locks in losses, and staying on the sidelines means missing out on any subsequent rebounds. Rallies can come unexpectedly, with powerful bursts on a comparative handful of days. Thus, missing just a few days of strong gains can deeply compromise overall returns, particularly for investors with long-term horizons.

“The truth is that timing the market is notoriously difficult,” Gonzalez adds. “And it comes with a huge risk: Missing just a handful of the best days can cost you dearly.”

Energy-related volatility has tended to be short-lived and fickle.

Oil price shocks have often boosted energy stocks. However, history would suggest that they are not a panacea.

As described above, most geopolitical-related oil price spikes reversed within six months. In fact, of the 10 events surveyed, only two appeared to have lingering price effects. The three instances that pushed oil past $100 a barrel were all relatively short-lived, with prices retreating to, or below, precrisis levels within 180 days. That includes Russia’s 2022 invasion of Ukraine, which initially caused oil to surge to nearly $128 a barrel. Prices returned to their initial levels despite the ongoing conflict and embargos.

That might explain why energy companies rarely enjoyed sustained gains during these periods. he energy sector, both in the U.S. and internationally, tended to outpace the global market as prices rose. In the month before prices peaked, the energy sector — both domestically, as measured by the MSCI USA Index, and internationally, as measured by the MSCI All Country World Index (ACWI) ex-USA — beat the global MSCI ACWI. But the sector's fortunes tended to fall alongside energy prices. In the year after oil prices peaked, both measures of the sector lagged the global index on average by more than 11%.

Additionally, timing the market carries risks even in less volatile periods.

Selling in a down market crystallizes on-paper losses, which can be risky enough. But it also puts investors in a position of having to re-enter the market, preferably before a rally. That’s extremely tricky, and is complicated by the way that markets have historically rebounded. While broad markets have always bounced back from disruptions over time, they have rarely done so smoothly. Rather, they’ve often risen in spurts — spiky returns that are hard to predict and easy to miss out on. Consider: Over the decade ended December 31, 2025, a hypothetical investment in the S&P 500 Index that missed the best 10 days — that is, a mere 0.39% of trading days — would have been worth barely more than half of one that was 100% invested over that time frame.

Staying invested means participating in any market surges along the way, and doing so without the stress of wondering when to re-enter. That’s why we believe so strongly in diversification and spreading out investments across industry and geography, with a focus on high-quality companies in which our analysts and portfolio managers have high conviction. We believe this is the best way to pursue long-term financial goals.

* International stocks represented by MSCI All Country World Index (ACWI). As of March 31, 2026.