Iran & Your Portfolio

With everything going on in the Middle East, I'd like to share some thoughts and perspectives around what it all may mean for your money and financial future.

Near-term pain, especially for the world's stock markets, may very well occur. As a general rule of thumb, markets do not react well to volatile situations rife with uncertainty. However, if history is any indication, any short-term pain is likely to also be short-lived.

As this chart from J.P. Morgan shows, geo-political events usually lower stock market returns in the first ~ 3 months after the event. However, within 6-12 months, markets tend to bounce back and returns become remarkably consistent with their long-term averages. This is why it is so important to think in decades, and not days.

Sources: Robert Shiller, Haver Analytics. Data as of December 31, 2023. Note: Return refers to price return. Geopolitical events in the above chart refer to 36 events selected from 80 years of geopolitical events beginning with Germany’s invasion of France in 1940 and ending with the war in Ukraine in 2022. We measured the 3-month, 6-month and 12-month returns following these events.

Oil prices are also in focus due to Iran threatening to close the Straight Of Hormuz, which about 20% of the world's oil passes through. Here's a rather remarkable chart that shows why that is no longer the chokehold that it was in the 1970's; the U.S. is producing record amounts of oil all on it's own.

Sources: Energy Information Administration, Haver Analytics. Data as of December 31, 2023. 

Lastly, I fully acknowledge that "sit tight" can be hard advice to hear with so much going on in the world, but please understand that I bring that advice to you as a result of a life long study of this topic, and that it's simply what the data suggests is best. The following chart from Dimensional exemplifies that.

The bar on the far left represents the "sit tight" approach. The other bars represent the growth of your hypothetical investment had you missed out on the best corresponding periods. Any time you choose to sell and wait out the periods of uncertainty just like we're in today, this risk becomes very, very real.

Of course, I am here monitoring events and markets, and you will hear from me if any further developments require your attention. If you'd like to take this time to review your portfolio or anything else, please schedule some time together below.

Meet With Garrett

Moore Financial Management, Inc. is an Investment Adviser registered with the State of Florida. Our current disclosure brochure, Form ADV Part 2, is available for your review upon request. Past performance is no guarantee of future results. All investing involves risk, including the loss of principal. This email is for educational purposes only and is not advice. Consult with your tax, legal, and financial advisor before engaging in any transaction.