Are scary headlines making you nervous?
Are you feeling troubled by coverage of the current war?
Well, if you are, you’re certainly not alone.
Market volatility tends to happen during moments of heightened stress. That’s when we see stock prices bouncing up and down like a yo-yo. This can be unnerving.
But watch out: increased volatility doesn’t necessarily mean increased danger. It just means increased uncertainty.
Jim Osman offers a rational perspective here, which I think is worth considering.
Source: Jim Osman / LinkedIn
Of course, as investors, we have this tendency to overreact to short-term dips — even if those dips prove to be relatively minor over the long-term.
- Why does this happen? Well, it happens because of what I like to call the ‘noise-to-signal ratio’. We’re being bombarded with so much noise. Every hour. Every day. But very little of it actually represents a genuine signal.
- Perhaps we can blame the fog of war for this? From opportunistic politicians to ideological journalists, all of them competing for our attention spans. So they know exactly how to press our emotional buttons. Amplify our feelings of anxiety.
- But, frankly, 99% of what they are telling us is noise. It only serves to obscure rather than reveal. Because the news isn’t optimised for truth. It’s optimised for engagement.
Source: Peter Mallouk / LinkedIn
So, if we choose to look past all that noise, how do we find the rare signal? Well, I think history can teach us something valuable here.
- When I look back at 23 major conflicts in the past, one fact holds true: the market stays resilient over the long-term. It adapts and overcomes, even under intense stress.
- Across 85 years, I find that the S&P 500 has delivered an annualised return of 11.74%. Some years are stronger. Some years are weaker. But overall, the outcome remains positive.
- Historically speaking, $1 invested in January 1941 would have grown to over $12,700 by March 2026. That’s the power of quiet compounding.
Source: Macro Charts / X
So, do you have steady nerves? Can you survive and thrive under pressure? Well, sometimes it’s just about rewiring your brain. Being open enough to embrace a contrarian mindset.
- Let me give you a simple illustration here. Just imagine that you’re driving a car. You see a bear coming up on the road ahead. When you stare at it through your windscreen, it gets larger and larger. The looming threat feels real. As you close in on the bear, your fingers flex around your steering wheel. Your shoulders bunch up. Your throat constricts.
- But once you drive past the bear, it recedes into your rearview mirror. It gets smaller and smaller behind you. Until it’s just a speck in the distance. The danger vanishes. You exhale in relief, allowing yourself to relax. The bear wasn’t really a threat at all. The animal was simply crossing the road, minding its own business.
- I think this analogy holds true with what we’re seeing today. Yes, the current Iranian crisis appears to be a serious problem. But, with the benefit of time and distance, we will eventually see it for what it is: just another fleeting episode in the long-running history of the market. Large in the windscreen but small in the rearview mirror.
- Wars come. Wars go. But a smart investor won’t allow himself to get distracted by the noise. He will focus on the signal. He will use it as a chance to buy good assets for the long-term.
Our Quantum Income Strategy
Tough times never last, but tough people do. Even in the midst of war, there is opportunity.
- Do you qualify as a Wholesale and Eligible Investor?
- If you do, we have a Quantum Income Strategy that’s designed to protect your wealth. Grow your wealth. Deliver you passive income.
- We go beyond New Zealand — targeting the best and brightest opportunities around the world. Our main hunting grounds for value are Australia, Europe, and America.
- Are you interested?
Regards,
John Ling
Analyst, Wealth Morning
(This article is the author’s personal opinion and commentary only. It is general in nature and should not be construed as any financial or investment advice. Wealth Morning offers Managed Account Services for Wholesale or Eligible investors as defined in the Financial Markets Conduct Act 2013.)