Global Conflict and Market Volatility: Why Diversification Matters
By Chief Investment Officer Tom Kelly, CFA
Recent market volatility has understandably raised emotions and concerns over the last week. The combination of geopolitical tensions unfolding in the Middle East and a struggling job market have caused global stocks to fall around 5% within the past couple weeks.
When headlines are alarming and markets move sharply up or down, it is natural for you to wonder about your investments. It’s important to recognize that the other investments in diversified MarketPlus® Investing portfolios - bonds, diversified alternatives, and private investments - have not been nearly as affected.
While never pleasant, volatility is the price of pursuing higher expected returns; risk and return are inseparable. We can’t predict exactly when volatility will occur or how markets will respond to geopolitical events and economic developments.
At SJS, we build client portfolios with this uncertainty in mind. When we experience these periods, the most effective action is often to stay in your seat and remain committed to our MarketPlus® Investing philosophy and its four core fundamentals:
Markets are efficient and are generally priced fairly.
Speculating is futile.
Global markets have rewarded disciplined investors over the long term.
Portfolio design matters most.
Looking at the long‑term history of a diversified portfolio, despite the numerous conflicts, markets remain resilient. While it is extremely difficult to know in advance when volatility will occur or which specific events will trigger it, we can prepare by sticking to a robust process and focusing on what is within our control such as systematically rebalancing and staying with you each step of the way.
Please reach out if you would value a conversation or a review of your personal investments.
Military Conflicts and Global Stock Returns
Source:
Avantis Investors, from the article “Military Conflicts and Global Stock Returns” from the February 2026 Monthly ETF Field Guide. The graph represents performance of U.S. stocks, using data from the Ken French Data Library over the period of July 1926 – December 2025.
Important Disclosure Information:
Global stocks are measured by the MSCI All Country World IMI Index, which captures approximately 99% of global market capitalization across 23 developed and 24 emerging markets.
There is no guarantee investment strategies will be successful. Past performance is no guarantee of future results. Diversification neither assures a profit nor guarantees against a loss in a declining market.
Indices are not available for direct investment. Index performance does not reflect the expenses associated with management of an actual portfolio. Index performance is measured in US dollars. The index performance figures assume the reinvestment of all income, including dividends and capital gains.
Statements contained in this article that are not statements of historical fact are intended to be and are forward looking statements. Forward looking statements include expressed expectations of future events and the assumptions on which the expressed expectations are based. All forward looking statements are inherently uncertain as they are based on various expectations and assumptions concerning future events and they are subject to numerous known and unknown risks and uncertainties which could cause actual events or results to differ materially from those projected.