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Why Stock Prices Don’t Always Drop During Global Conflicts

Today’s Headline
Markets Don’t Fear War. They Fear Not Knowing What Comes Next.
Hey friends,
Lately, I’ve been seeing a lot of headlines that make your stomach twist: conflict in the Middle East, rising tensions between superpowers, and political chaos in places that used to feel stable. It’s easy to assume that war itself is what scares the markets. But here’s the thing I’ve learned after watching the markets for years:
Markets don’t really fear war. They fear uncertainty.
Let me explain.
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Why Markets Shrug Off War (Sometimes)
It sounds wild, but the stock market often doesn’t crash during wartime. In fact, after the initial shock, stocks sometimes go up. That’s because markets can price in war if they know the details: where it is, how long it might last, who’s involved, and what the likely outcomes are.
When Russia invaded Ukraine in early 2022, the markets reacted. But not for long. Once investors understood the likely scale of the conflict, they adjusted and moved on.
But when war is unexpected, or might escalate in strange ways—that’s when fear really hits. That’s when people sell.
Uncertainty Is the Real Villain
Here’s why uncertainty freaks out markets:
It clouds earnings forecasts – Companies can’t plan ahead when they don’t know what’s coming. And if companies can’t plan, investors can’t either.
It fuels panic – When no one knows the size of a threat, people assume the worst.
It disrupts trade – Wars can throw a wrench in global supply chains. The more widespread or unpredictable the conflict, the worse the impact.
It shakes confidence – Investors hate surprises. Confidence drops fast when they feel blindfolded.
We saw this in past events like the Gulf War, the Cuban Missile Crisis, and even 9/11. Markets didn't just react to violence. They reacted to not knowing what comes next.
The Market’s Favorite Thing: Clarity
Markets love clarity, even if the news isn’t great. Knowing the Fed will raise rates? The market can deal with that. Knowing inflation is sticky? Investors will adapt.
But not knowing if a conflict will spill over into new regions? Not knowing if global oil supply will be interrupted? Not knowing if allies will get pulled into war?
That kind of uncertainty can cause wild swings.
It’s the guessing game that makes people nervous.
What Investors Should Do During Geopolitical Uncertainty
When the world feels unstable, here are some practical moves I keep in mind:
Stay invested – Selling everything usually means locking in losses. Most geopolitical dips recover in time.
Hold quality companies – Strong balance sheets and global reach matter more during chaos.
Diversify by region – Don’t bet everything on one country. Spread the risk.
Own some safe havens – Gold, bonds, and even cash have a role when markets get choppy.
Don’t try to time headlines – If you’re waiting for the perfect moment, you’ll miss it.
This is how I protect my portfolio while still keeping it growing.
Examples from the Past
Let’s look at what history shows:
World War II – After the U.S. joined the war, stocks initially fell. But by 1942, the market began a long bull run, even as the war raged on.
Vietnam War – Markets stayed mostly flat through years of conflict, but inflation was the bigger issue.
Gulf War (1991) – The S&P 500 dropped 17% during the buildup but rebounded quickly after the war began.
9/11 Attacks – Markets closed for a week. When they reopened, stocks fell, but recovered in months.
In each case, once uncertainty faded and outcomes became clearer, markets stabilized.
How I Stay Calm When Headlines Get Loud
I get it. It's scary to see "BREAKING NEWS" alerts every hour.
Here’s what I remind myself:
The market is made of humans. Humans get scared.
But history shows markets are resilient.
Fear is temporary. Fundamentals win in the long term.
That’s why I don’t make huge changes based on panic. I check in, adjust where needed, and stick to the plan.
Think Long, Act Smart
One day the war will end. One day the news cycle will move on.
But the money you invest today could still be working years from now.
Investing isn’t about predicting the next headline. It’s about preparing for anything. And that means being smart, being balanced, and being calm.
Final Takeaways
Markets don’t hate war. They hate surprises. As long as there’s a fog of uncertainty, we can expect volatility.
But volatility isn’t always bad. It’s what creates opportunities.
So instead of fearing the unknown, use it as your signal to stay alert, stay disciplined, and stay invested.
History shows that those who do are the ones who build real wealth.
Talk soon,
Your friend in finance
[Live Life Grow Wealth]
DISCLAIMER
I make no representations, warranties, or guarantees, whether expressed or implied, that the content provided is accurate, complete, or up-to-date. Past performance is not indicative nor a guarantee of future returns.
I am an individual content creator and not regulated or licensed by the Monetary Authority of Singapore (MAS) as I do not provide investment services.
All forms of investments carry risks, including the risk of losing your entire invested amount. Such activities may not be suitable for everyone. You are strongly encouraged to seek advice from a professional financial advisor if you have any doubts or concerns.