What History Actually Tells Us About Geopolitical Events and Markets
If you are feeling anxious about your investments right now, you are not alone — but historical data should reassure you. Geopolitical crises, as severe as they feel in the moment, have consistently had a limited long-term impact on equity markets.
Consider the Cuban Missile Crisis of 1962, arguably the closest the world has come to nuclear war. During those 13 terrifying days, the Dow Jones fell just 1.2%. By the end of that year, the Dow was up 10%. The same pattern holds across the Gulf War in 1990-91, the September 11 attacks in 2001, and Russia's invasion of Ukraine in 2022. In nearly every case, equity markets experienced a sharp initial drop followed by recovery within weeks to months, not years.
As Barclays Private Bank noted in its March 2026 market update, disciplined strategic asset allocation remains the most important driver of portfolio returns in moments like these, and maintaining composure is critical.
"The conflict hasn't destroyed the 2026 long-equities thesis, but it has made it far more rate- and oil-dependent." — Lale Akoner, Global Market Strategist, eToro
How the Conflict is Specifically Affecting GCC Investors
For Saudi investors, the situation has a dual character unlike anywhere else in the world. On one hand, geopolitical instability creates uncertainty and pressures equity valuations. On the other, Saudi Arabia is one of the world's largest oil exporters. Higher crude prices, a direct consequence of Hormuz disruption fears, could provide meaningful support to Saudi Arabia's economy and government revenues.
This explains why the TASI recovered quickly after its initial 5% plunge. Goldman Sachs Asset Management noted in its March 2026 market brief that GCC countries showed diplomatic unity in keeping trading channels open, and no systemic disruption in financial infrastructure occurred. Morgan Stanley has also upgraded Saudi Arabia on the back of energy upside, while downgrading the UAE.
The risk that remains is what Goldman calls a sustained disruption to the Strait of Hormuz, a tail risk that would represent a fundamentally different scenario from what markets are currently pricing. For now, most analysts believe the conflict will be relatively short-lived.
5 Practical Steps to Protect Your Portfolio Right Now
1. Do Not Panic-Sell
The single most costly mistake investors make during geopolitical crises is selling at the bottom of a panic-driven drawdown. If you sold your US tech holdings on March 3, 2026, you likely sold into the daily low. Markets recovered significantly by the close. Far more money has been lost throughout history by investors trying to time these moments than by those who held steady.
2. Diversify Across Geographies
If your entire portfolio is concentrated in TASI stocks, the current crisis is a powerful reminder of concentration risk. US equities particularly those in sectors not directly reliant on Middle East energy flows have proven significantly more resilient during this period. Diversifying a portion of your portfolio into US stocks and ETFs through a platform like Raseed is one of the most effective long-term risk management strategies available to GCC investors.
3. Look at Defensive Sectors
During geopolitical uncertainty, certain sectors historically outperform: energy (direct beneficiary of oil price spikes), healthcare, consumer staples, and defence. If you are rebalancing, consider increasing exposure to these areas relative to interest-rate-sensitive growth stocks.
4. Consider Gold as a Hedge
Gold reached above $5,300 per ounce during the initial March 2026 market disruption, its largest safe-haven spike in years. Holding 5-10% of a portfolio in gold or gold-related instruments has historically reduced portfolio volatility during war-driven market shocks.
5. Keep a Long-Term Perspective
The 30-year average annual return of the S&P 500 remains approximately 10-11% per year, a figure that already incorporates every war, recession, and crisis of the modern era. Investors who stayed fully invested through every geopolitical shock of the past four decades dramatically outperformed those who moved in and out of the market trying to avoid volatility.
The Opportunity Hidden Inside the Uncertainty
While this is not the time for reckless risk-taking, significant market dislocations during crises have historically created compelling entry points for long-term investors. As Barclays noted, 'buying the dip' has been a successful approach over many years, and equity markets should trend higher over time.
GCC investors who take a measured, diversified approach continuing to invest in quality companies at temporarily depressed prices are likely to look back on March 2026 as an opportunity rather than a reason for regret.
Final Word
The Middle East conflict is real, the uncertainty is real, and the market volatility is real. But for long-term investors, this is not a time to abandon strategy, it is a time to reinforce it. Keep your diversification in place, avoid concentration in any single market, and remember that the history of investing is overwhelmingly a history of markets recovering and moving higher.
Raseed offers GCC investors access to US stocks, ETFs, and options with some of the lowest fees in the region all from a DFSA-regulated platform. Start building a diversified global portfolio from just $1.
Disclaimer: This article is for informational and educational purposes only and does not constitute financial advice. All investments involve risk. Past performance is not indicative of future results.