By now you've seen the headlines. On February 28th, the United States and Israel launched coordinated strikes on Iranian military and nuclear targets, marking one of the most significant military escalations in the Middle East in decades. Markets reacted — oil and gold jumped, equities sold off at the open — and then, in a pattern that should feel familiar by now, the S&P 500 ended that first day essentially flat.
That's not an accident. That's history rhyming.
The world has never actually been short on chaos. Since 1928, markets have weathered World War II, the Korean War, Vietnam, the Cuban Missile Crisis, the Gulf War, 9/11, the 2008 financial crisis, COVID-19, and every major conflict in between. Every one of those events felt unprecedented in the moment. Every one of them passed. And through all of it, the S&P 500 climbed from single digits to over 7,000.
When a geopolitical shock hits, markets tend to flinch. Pearl Harbor sent stocks down 20.34% before they recovered. The 9/11 attacks caused an 11.89% drawdown. Iraq's invasion of Kuwait — another Middle East conflict involving U.S. military force — produced a 17.47% decline. But in every one of those cases, markets recovered fully. The year following Kuwait, stocks were up 13.66%. After the Cuban Missile Crisis, the market gained nearly 31% in the twelve months that followed. When Russia invaded Ukraine in February 2022, stocks didn't even record an initial decline.
With US markets being the center of the investing world, it makes sense that it tends to react more when the US is involved. Still, the same resilience shows up even when you look at full-blown wars involving the US military. During World War II, the U.S. stock market posted an annualized return of 20.1%. During the Korean War, 15.3%. The Gulf War generated a 10.1% annualized return while fighting was actively underway. Markets are forward-looking by nature, and they have a long track record of moving through geopolitical uncertainty faster than the news cycle does.
Corrections tell the same story. Looking at every market pullback of at least 10% going back to 1980, the average drawdown was roughly 18%. In the year that followed, markets were higher nearly 89% of the time, with an average gain of over 24%. Three years out, that positive rate climbed to 94%. Investors who stepped away during those moments of fear missed most of the recovery.
Bottom Line
To be clear, we are monitoring this situation closely. The path forward in Iran matters — particularly for energy prices and broader regional stability. Strategists across the industry broadly agree that the economic impact will hinge largely on oil supply disruptions, and that geopolitical shocks have rarely led to lasting moves in major asset classes once the initial reaction fades. We aren't dismissing the uncertainty — we're acknowledging it while keeping it in context.
The $10,000 invested in the S&P 500 at the start of 1970 — through stagflation, Black Monday, the dot-com bust, the financial crisis, a global pandemic, and dozens of geopolitical crises — grew to over $3.5 million by the end of 2025. The plan you have in place was built with moments exactly like this one in mind.
If you want to talk through what you're seeing or how your portfolio is positioned, we're always available.
Disclosures
This material has been prepared for informational purposes only and should not be construed as a solicitation to effect, or attempt to effect, either transactions in securities or the rendering of personalized investment advice. This material is not intended to provide, and should not be relied on for tax, legal, investment, accounting, or other financial advice. You should consult your own tax, legal, financial, and accounting advisors before engaging in any transaction. Asset allocation and diversification do not guarantee a profit or protect against a loss. All references to potential future developments or outcomes are strictly the views and opinions of Richard W. Paul & Associates and in no way promise, guarantee, or seek to predict with any certainty what may or may not occur in various economies and investment markets. Past performance is not necessarily indicative of future performance.