War, Oil, and Stock Market Resilience | The Informed Investor 41

Episode 41: Are you an investor who gets rattled by news about the war? It's a common reaction. Worrisome headlines, especially those highlighting geopolitical conflicts or missile launches or the loss of life, would scare just about anyone. But it's important to separate your emotional reactions from your approach to investing. Current market prices generally reflect whatever is happening around the world. This means the market has already digested the worst (and best) news of the day and moved accordingly. So investors who think stocks are due for a big move due to the war in Iran, blockades, oil prices, or anything else should realize that market prices have already incorporated all that information and landed in a place that offers positive expected returns. The past offers some useful context. In many cases the stock market showed resilience in response to episodes of geopolitical turmoil. Even the shock of the COVID-19 pandemic didn't stop the market from rallying through the end of 2020. Painful drawdowns can happen when global conflicts turn into hot wars, and those drawdowns can last a while. But market pessimism can also turn around in a flash. It's not uncommon to see intrayear declines of 10% or more in years when the market delivers strong returns. In Episode 41 of The Informed Investor, Dimensional's Mark Gochnour, Head of Global Client Services, Wes Crill, Senior Client Solutions Director, and Jake DeKinder, Head of Client Communications, analyze stock market reactions to geopolitical risks and discuss what investors can do to manage the fallout. LINKS FROM TODAY'S EPISODE:  Subscribe to the Stay Calm Investing Newsletter https://www.staycalminvesting.com/newsletter The Informed Investor Feedback Survey https://www.dimensional.com/us-en/informed-investor-survey The Informed Investor on YouTube https://www.youtube.com/playlist?list=PLCyJr6FFig-h1mA7rVP7Mbk0irFw2wA90  Dimensional Fund Advisors Shorts on YouTube https://www.youtube.com/@dimensionalfundadvisors/shorts Mark Gochnour on LinkedIn https://www.linkedin.com/in/mark-gochnour-9a23598a/ Wes Crill on LinkedIn https://www.linkedin.com/in/wes-crill-77a49417/ Jake DeKinder on LinkedIn https://www.linkedin.com/in/jake-d-4105b98/ Learn more at https://www.dimensional.com/