Putting Iran War Worries in Perspective
- Marc Lowe
- Feb 23
- 4 min read
Updated: Mar 2
I went to visit a retired veteran at the physical rehab facility near Waterford, CT, who had taken a hard fall a few weeks ago. My expectations were that he would want to talk about some of the planning topics that had been top of mind for him, revolving around his estate plan, for which he had a few missing key documents, or the almost non-existent life insurance plan for which he had been bringing up for multiple conversations. But after we had shared greetings and talked about his days stationed in Germany while in the air force, the first thing he brought up that was concerning him was the threat of what a war with Iran would do to the stock market. Before jumping into the financial planning conversation, we spent some time talking about Iran and what history has shown us about the relationship between regional wars and the stock market.
I started by recognizing that headlines about war with Iran are all over the news right now. Words like attack, escalation, and Strait of Hormuz are doing what they always do, grabbing attention and stirring anxiety.
With the U.S. shifting forces toward the Middle East and nuclear negotiations with Iran dragging on, investors are understandably asking:
Will a potential U.S.–Iran conflict derail the markets?
History suggests: probably not.
Let’s sum up what's happened and take a trip down memory lane.
Markets Are Rarely Surprised by Widely Telegraphed Conflicts
Recent comments from Donald Trump about potentially “taking it a step further” with Iran have fueled speculation about military action. If you listen to famous podcasters in the news, or follow what's happening, you may feel that a war is imminent.
But here’s the thing:
When something dominates headlines, markets have already digested it.
Markets are forward-looking. They price in widely anticipated events long before they occur. That’s why oil barely moved recently—Brent crude remains in the middle of its normal trading range. Global stocks, including Israeli equities, are hovering near highs.
If investors were bracing for a global economic shock, you would see it reflected in asset prices.
You don’t.
We’ve Seen This Movie Before
Conflict in the Middle East is tragically common. Yet from a market perspective, most regional wars create short-term volatility—not Bear Markets.
Consider recent and historical examples:
2024 Iran–Israel fighting
The 2006 Israel–Hezbollah conflict
The 2003 Iraq invasion
1990–1991 Desert Storm
1967’s Six-Day War
In each case, markets experienced temporary swings but continued to follow broader economic fundamentals.
Stocks don’t react emotionally. They react to expected impacts on earnings over the next 3–30 months.
Unless a conflict meaningfully alters global trade, supply chains, or corporate profits on a large scale, its market impact tends to fade quickly.
What About the Strait of Hormuz?
Whenever tensions rise, the Strait of Hormuz dominates the conversation.
Roughly a third of seaborne oil passes through this narrow waterway. The fear is real: if Iran blocks it, oil prices spike, inflation surges, and markets likely tumble.
But history tells a different story.
During the eight-year Iran–Iraq War in the 1980s—when both sides attacked tankers—only a small fraction of shipments were meaningfully disrupted. Markets adapt.
Shipping reroutes. Supply adjusts.
We saw this again when Houthi attacks disrupted traffic near the Red Sea. Freight simply moved around the Cape of Good Hope.
Annoying? Yes. Catastrophic? No.
Markets are remarkably flexible systems.
The Russia–Ukraine Counterpoint
Some point to Russia’s 2022 invasion of Ukraine as proof that war causes bear markets.
But the 2022 downturn wasn’t driven by war alone. It occurred amid:
Post-pandemic supply chain distortions
Rapid inflation
Aggressive global rate hikes
Widespread investor pessimism
The war was one ingredient in a much larger stew of fears.
And importantly, the current bull market began long before the war ended. Both events are still ongoing.
The lesson? Markets are influenced more by monetary policy, economic growth, and people's emotions than by most regional conflicts.
Why This Matters for Pre-Retirees
As a financial planner working with folks gearing up for retirement, I see the same pattern repeatedly:
A geopolitical headline hits.
Anxiety spikes.
Investors consider making emotional portfolio changes.
But transitioning to retirement during chaotic times requires patience & discipline. Making knee-jerk reactions can derail a retirement plan.
Remember:
Markets price in widely known risks.
Short-term volatility is normal.
Regional conflicts rarely derail global earnings.
Emotional decisions often do more harm than the event itself.
War is tragic in human terms. That reality should never be minimized.
But from an investment standpoint, history strongly suggests that unless a conflict expands dramatically beyond its region, the market impact is usually temporary.
If you’re wondering whether your portfolio is positioned appropriately for uncertain times, it my be time to open a planning conversation.
You only get one shot at retirement.
About the Author
Marc Lowe, CFP® is a fee-only fiduciary advisor based in Waterford, CT, helping pre-retirees & small business owners make smarter financial decisions.
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