Is Discipline Still Rewarded in Volatile Markets?

Markets continue to be shaped by developments in the Middle East, with the Strait of Hormuz remaining a key focus given its importance to global energy flows. Headlines over the past week have caused sharp swings in oil prices and equities, underscoring just how quickly sentiment can shift in today’s environment.

Earlier in the week, a slightly more constructive tone helped stabilize markets and ease oil prices. That said, the situation remains fluid, and markets are still reacting in real time to new information. In our view, the key question is not the initial spike in oil, but how long these disruptions may persist.

Oil remains elevated but below the highs seen at the start of the conflict, suggesting that markets expect some form of eventual de-escalation. Interest rates have remained stable, signaling that investors currently view this primarily as a contained shock rather than a broad structural threat to growth. Until there is greater clarity, we expect volatility to remain a feature of markets.

This is an important moment to step back and keep perspective.

One of the most consistent lessons from history is that intra-year drawdowns are normal, even in strong years. In 2025, for example, the S&P 500 fell nearly 19 percent at one point due to uncertainty around trade and tariffs. Yet by year-end, disciplined investors were rewarded as the market posted a gain of roughly 18 percent.

This is not unusual. As illustrated in the chart below, since 1980, the average intra-year decline has been around 14 percent, yet markets finished higher roughly three quarters of the time. Volatility is not a signal that something is broken; it is part of how markets work.

The takeaway is simple. Short-term swings are inevitable, but long-term outcomes are driven by discipline, perspective, and staying invested in a manner aligned with your time horizon and risk tolerance. Patience is rewarded, even when markets feel uncomfortable.

Volatility is normal. Perspective is powerful.