Expert insight

How to withstand challenging markets—again

March 02, 2022

Greg Davis

Vanguard Chief Investment Officer

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.
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