“Stock markets plunge amid fears of prolonged war in Iran”; “Stocks plunge, oil prices up 20% since start of Iran war”.
The headlines at the outbreak of the Iran conflict were not exactly conducive to calm.
Back then, bulls countered that this would be a short conflict, that we’d get a Trump “taco” (Trump always chickens out), and the US president, conscious of November’s midterm elections, would surely bring the war to a quick conclusion.
Six months later, the conflict is unresolved. Oil prices are again above $100. Inflation has been felt around the world, with food and energy prices spiking.
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And the S&P 500? It’s up 13 per cent, and stocks around the world have enjoyed a similarly sunny time.
Back in March, this column quoted BCA Research’s Marko Papic, who noted that “buying on the sound of cannons” had historically been a winning strategy.
This time has been no different.
Creative Planning strategist Charlie Bilello makes the same point. Wars end, says Bilello, while economies and corporate earnings, even when temporarily impaired, have tended to grow over the longer term.
They certainly have in 2026. S&P 500 earnings grew a “historic” 52 per cent in the latest quarter, notes Bilello, doubly exceeding expectations.
Net profit margins hit a record 17 per cent, while full-year earnings growth forecasts have more than doubled to 34 per cent.
For all the talk of geopolitical risk, investors have had a very decent six months, with the market behaving much as history would suggest.
