Expert insight

How to withstand challenging markets—again

March 02, 2022

Greg Davis

Vanguard Chief Investment Officer

Geopolitical sell-offs have often been short-lived
Initially, markets tend to react negatively to geopolitical events, but these reactions tend to be short-lived. This chart looks at the market returns following a sell-off caused in part by a geopolitical event. On average, stocks returned 5% in the six months following the event and 9% in the 12 months after the event. The illustration depicts eight such events: the 1962 Cuban Missile Crisis, when stocks returned –5% during the initial sell-off, 21% over six months, and 26% over 12 months following the event; the 1974 impeachment proceedings of President Richard Nixon, –4% during the initial sell-off, –11% over six months, and –16% over 12 months; the 1979 Iranian hostage crisis, –3% during the initial sell-off, 3% over six months, and 26% over 12 months; the 1979 Soviet invasion of Afghanistan, –5% during the initial sell-off, 6% over six months, and 26% over 12 months; the 2003 Iraq War, –3% during the initial sell-off, 19% over six months, and 27% over 12 months; the 2011 Arab Spring, –3% during the initial sell-off, 3% over six months, and 3% over 12 months; the 2014 Ukraine conflict, –1% during the initial sell-off, 8% over six months, and 12% over 12 months; and the 2016 Brexit vote, –5% during the initial sell-off, 7% over six months, and 18% over 12 months.
A new challenge for markets and policymakers
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