Wobbly Markets & Troublesome Tickers

by

Confused Investor

Now, listen closely. There’s been a bit of a kerfuffle in the Middle East, a proper to-do if you will, and naturally, the stock market has been doing its usual jig – a sort of panicked wobble, really. It’s like a plate of jelly on a rather bumpy bus. This isn’t entirely surprising, of course. Markets dislike uncertainty almost as much as children dislike Brussels sprouts.

This particular botheration, involving the U.S., Israel, and Iran, has spread its messy fingers to other places, making things even more complicated. Investors, bless their cotton socks, are desperately trying to guess how long this unpleasantness will last and what it means for their precious piles of money. A fool’s errand, if you ask me. Predicting the future is like trying to herd particularly stubborn snails.

However, history, that grumpy old fellow, does offer a few clues. Not guarantees, mind you, just hints. We’ve had a peek at what happened during previous wars – World War II, Korea, Vietnam, the Gulf War, Iraq, Afghanistan – and it’s a rather predictable pattern. Three months before a war, the S&P 500 tends to lose a bit of puff – about 2.8%, on average. After the first explosions, it usually dips even further – a hefty 7.85%, in fact. A bit of a bruising, wouldn’t you say?

The Afghanistan War was a particularly nasty example. The S&P 500 took a proper thump – down 11.4% before the fighting started, then a surprising bounce back with a 10.4% gain afterward. Peculiar, isn’t it? It seems markets enjoy a bit of chaos, or perhaps they just like a good gamble. Small-cap stocks, those nimble little chaps, did rather well during wartime, delivering an average return of 12.2%. Large-cap stocks weren’t far behind, at 11.9%. Long-term bonds and five-year notes? Dull as dishwater, really, returning a measly 3.8%.

Oil & Other Sticky Situations

Now, let’s talk about oil. A truly ghastly substance, if you ask me. Wars have a nasty habit of sending oil prices soaring, and that, my friends, is bad news for everyone. It’s not that the Federal Reserve worries about it directly, but it certainly makes life more expensive for ordinary folk. And at a time when affordability is already a problem? Well, that’s a recipe for trouble.

The stock market gets the jitters when oil prices jump because it hits consumers’ pockets and raises costs for businesses. Crude oil has already surged 30% this year, largely because everyone suspected this Iran business was brewing. And then, when it actually did brew? Oh dear. Iran, in a fit of pique, threatened to close the Strait of Hormuz – a vital waterway for oil tankers. Imagine the chaos! Twenty million barrels of oil pass through that narrow passage every single day.

Analysts are warning that oil prices could climb above $100 a barrel. In the Gulf War of 1990, prices shot up 135% in just a few months. During the two decades of the Afghanistan War, they tripled! Recessions often follow these oil price spikes, and we’ve been grappling with affordability issues for quite some time now.

President Trump, ever the showman, has offered “political risk insurance” for tankers and even suggested the Navy escort them through the Strait of Hormuz. A rather dramatic gesture, wouldn’t you agree?

It’s impossible to say what will happen next, of course. But if this conflict is short-lived, the market might bounce back fairly easily. However, prolonged war or damage to energy assets in the region would likely create bottlenecks and send oil prices soaring. And if American soldiers end up on the ground? Well, that would be a particularly nasty blow to the market. A very nasty blow indeed.

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2026-03-10 19:34