Market Shock: Iran Conflict
Statement from R&R Financial: Week of March 2, 2026
You may have seen recent headlines regarding the escalating conflict involving Iran. Geopolitical events like this can understandably create concern and often lead to increased volatility in financial markets in the short term. While markets typically react quickly to uncertainty, history consistently shows that these reactions tend to be temporary.
Periods of geopolitical tension have occurred many times over the past several decades—wars, financial crises, political shocks, and global pandemics. Each of these events created short-term uncertainty, yet markets historically recovered and continued to grow over time.
The chart below from J.P. Morgan illustrates an important historical pattern. It shows how a diversified 60/40 portfolio (60% stocks, 40% bonds) performed compared to holding cash following major geopolitical shocks.
“Following major geopolitical shocks, a diversified 60/40 portfolio has historically outperformed cash 75% of the time after one year—and 100% of the time after three years.”
Key Takeaways from the Data:
After 1 year: A diversified 60/40 portfolio outperformed cash about 75% of the time, by an average of roughly 7%.
After 3 years: A 60/40 portfolio outperformed cash 100% of the time, by an average of about 22%.
In other words, while geopolitical events often cause short-term volatility, investors who remain disciplined and stay invested have historically been rewarded over longer time horizons.
What this means for our approach:
We expect some additional volatility as markets process new information related to the Iran conflict.
Our portfolios are already designed to diversify risk and withstand periods of uncertainty.
Attempting to move to cash during periods like this often means missing the recovery that follows.
For long-term investors, reacting emotionally to geopolitical headlines is rarely the optimal strategy. Remaining disciplined and focused on the long-term plan continues to be the most effective approach. As always, we are actively monitoring developments and will reach out if any adjustments become necessary. If you have questions or would like to discuss your portfolio, please feel free to contact me anytime.
“Our portfolios are designed for moments like this—diversified, disciplined, and focused on long-term outcomes rather than
short-term headlines.”
The commentary in this blog is for informational purposes only and should not be taken as personalized investment advice
Sources: Bloomberg, NBER, J.P. Morgan Asset Management; data as of September 2025. See Dario Caldara and Matteo lacoviello, "Measuring Geopolitical Risk," American Economic Review, 112, no. 4, April 2022.
