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Markets hate uncertainty, and right now, there’s a lot of it.
Escalating tensions in the Middle East have rattled global markets, disrupted energy trade routes and fueled debate among investors about what the conflict means for oil prices, inflation and economic growth.
But veteran investor Howard Marks, co-founder of Oaktree Capital Management, says an emotional reaction to the headlines may be the worst possible response.
“The main thing to keep in mind is how much we don’t know,” Markus said during a video at the Australian Financial Review business meeting, according to Bloomberg (1). “No one knows how long it will last, how big it will be or what the outcome will be.”
Uncertainty is real. President Donald Trump has said there is no definite timetable for war (2). Meanwhile, global energy markets remain on edge following disruptions in shipping through the Strait of Hormuz – a natural bottleneck responsible for nearly one-fifth of the world’s oil consumption, according to the US Energy Information Administration (3).
Investors are now debating what the war means for everything from oil prices to credit markets. But Marks warns that uncertainty itself often leads investors to their biggest mistakes.
“It’s easy to let your emotions affect you,” he said. “But it’s probably not very helpful.”
History suggests he may be right.
Research from the investment firm Vanguard shows that investors who react emotionally to market volatility are often those who invest simply and maintain a diversified portfolio (4).
Panic selling during a market crash can permanently lock in losses that long-term investors might otherwise recover.
The smart move is to prepare. Here’s how.
When markets become volatile, investors often feel compelled to act, even when doing nothing might be the best option.
During periods of uncertainty, common mistakes include selling stocks at a loss, concentrating too much in a single asset class such as commodities, or sitting in cash for too long and waiting for markets to “feel safe” again.
While understandable, emotional reactions to market changes can hurt long-term returns.
According to research from behavioral finance firm DALBAR, the average investor has historically underperformed the broader stock market, largely due to poorly timed buying and selling decisions driven by fear or overconfidence (5).
This is where professional guidance can help. A financial advisor can crunch the numbers and create a plan that works for you even in tough times.
But hiring a consultant can be a lifelong commitment, not just a wartime one. That’s why finding trusted advisors is so important.
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Wars don’t just move markets—they move goods.
Middle East conflicts have already pushed oil prices higher due to concerns over the Strait of Hormuz. Energy shocks can ripple through the global economy, raising transportation costs, consumer prices and inflation.
The oil embargo of the 1970s, for example, helped create a huge spike in inflation that changed the shape of international economic policy for years (6).
In times of geopolitical stress, some investors focus on assets that hold their value despite market turmoil.
Gold has historically performed well during periods of geopolitical instability and market volatility, according to research by the International Gold Council (7).
Because metals move independently of stocks and bonds, they serve as important portfolio diversifiers during uncertain times.
If you are concerned about inflation or currency volatility associated with energy shocks, you may want to consider investing in physical precious metals as part of a long-term asset protection strategy.
You can take advantage of the benefits of gold today by opening a gold IRA with a gold preference.
Gold IRAs allow investors to hold physical gold or gold-related assets in a retirement account—combining the tax advantages of an IRA with the protective benefits of investing in gold—making them an attractive option for those looking to protect their retirement funds against economic uncertainty.
Download your free information guide today to learn how you can earn up to $10,000 in free silver on qualifying purchases.
Marx himself suggested that predicting the outcome of a conflict might not lead to any wise movement.
“Because we don’t know what it means,” he said, “there’s probably nothing smart to do.”
But doing nothing doesn’t mean leaving your money completely idle. During volatile markets, investors often increase their cash holdings while waiting for further clarity.
The problem is that traditional bank accounts often pay very little interest. According to the FDIC, the average account still pays a fraction of a percent in annual interest, meaning inflation can quietly erode purchasing power (8).
Some investors use automated investment platforms or high-yield accounts to generate returns while maintaining flexibility.
One way you can do this is with a Wealthfront Cash Account.
Wealthfront’s cash account can provide a base variable APY of 3.30%, but new customers can earn 0.75% up to $150,000 in their first three months, for a 4.05% APY on your uninvested cash. That’s ten times the national savings rate, according to the FDIC’s January report.
With no minimum balance or account fees, 24/7 withdrawals and free domestic wire transfers, your funds stay accessible at all times. Additionally, balances up to $8 million are insured by the FDIC through program banks.
This method allows you to put your money to work while still maintaining liquidity as the markets change.
One of the most quoted pieces of investment advice comes from Warren Buffett.
“Be fearful when others are greedy, and greedy when others are fearful,” the chairman of Berkshire Hathaway famously wrote in a 1987 shareholder letter (9).
Buffett’s words can be summed up as: Don’t carelessly do what people do. If the markets are rising, stop buying. If the markets are low, buy at a fair (low) price.
Buffett has also frequently advised that many long-term investors are better off simply buying diversified index funds and holding them rather than trying to time the market.
Research supports this idea. According to studies by firms such as Hartford Funds, markets have historically been relatively resilient to geopolitical shocks ranging from wars to terrorist attacks (10).
The biggest risk for most investors is missing out on a rebound after panic selling.
Automated investment tools like Acorns can help investors maintain discipline even during turbulent markets.
Acorns uses dollar cost averaging to help users build a consistently diversified portfolio over time. Even a small amount can produce significant growth.
Signing up for Acorns takes minutes: just link your cards, and Acorns will round up each purchase to the nearest dollar, investing the difference in a diversified portfolio.
With Acorns, you can invest in a stock ETF with as little as $5 – and, if you sign up today, Acorns will add a $20 bonus to help you start your investment journey.
This approach can help investors continue to build wealth even when markets change, without reacting emotionally to a falling stock.
When it comes to uncertain times, history suggests the investors who do best aren’t the ones who react first—they’re the ones who stay prepared.
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Bloomberg (1); Semaphore (2); US EIA (3); Vanguard (4); Darling (5); Guardian (6); International Gold Council (7); FDIC (8); Berkshire Hathaway (9); Hartford Funds (10)
This article provides information only and should not be used as advice. It is provided without warranty of any kind.
