Aftermath of Major Geopolitical Events: Why Staying Invested Matters

When markets rebounded in April, it was one of the fastest V-shaped recoveries on record (chart). It was a reminder that exiting during periods of strain can be costly. In brief, here are some reasons why:

1. Markets often reprice faster than underlying economic or geopolitical realities evolve. Equity markets can adjust quickly to new information, while
macroeconomic and geopolitical conditions may evolve over longer horizons. This mismatch can make market moves feel disconnected from fundamentals, as markets are inherently forward-looking.

2. Historically, some of the best-performing market days occurred shortly after the worst. Missing even a small number of those days can materially affect long-term returns, and re-entering the market at higher levels can often prove psychologically difficult.

3. Disruptive events are more common than we may recognize. Geopolitical, economic and financial shocks are a recurring feature rather than the exception. On average, major disruptions occur roughly every two years. Given this frequency, waiting for clarity before investing can mean more time on the sidelines than in the market.

More broadly, history shows that markets have repeatedly absorbed geopolitical shocks and other periods of stress, ultimately recovering and resuming their upward trajectory. Accordingly, staying committed to a long-term investment plan can be one of the best actions investors can take.