Chapter 1: What current events are affecting the market during the Iran War?
Hello Investee Besties and welcome back to Friends That Invest, the podcast that feels like a voice note from your favorite finance friend. My name is Sim Kaur and I am wildly passionate about all things investing and personal finance.
It makes complete sense to spend today's episode talking about what's going on with the war, what it means for your investments, and just making sense of everything because there's a lot of fear. People are losing their returns very quickly. They're seeing their profits wiped out in a matter of days and a For some people, a matter of hours. So let's get into it. Let's break down what's going on.
Now, the best place to begin is by understanding what's gone on thus far. You're probably not living under a rock, so I'll spare you the political details. Essentially, the US and Israel have decided to team up and attack Iran. They were not expecting Iran to retaliate. They kind of just thought, we've got this in the bag. And the markets actually reacted quite well.
normally almost positively to the news after a small blip. Markets didn't tumble as much as people thought they would because investors basically said, do you know what? I don't think this is the end of the world. I think that this will be a short stint and therefore we've priced it in and it won't be a huge issue. Then on February 25th, the market started to have a change of heart.
They said, okay, this war is still going on, the Strait is causing issues, oil is becoming an issue, and Iran is not backing down in the way that the US and Israel thought it would. This might be a bit of a longer war than we expected, and the markets then priced this in by causing a large reduction.
From February 25th, 2026 to time of recording at the end of March, this saw an 8% drop in the S&P 500. And from March 25th, 2026 to March 30th, just a matter of days, the market dropped 4%. which is a large drop, not necessarily the worst drop. But of course, people were very, very scared because now it seems that investors are thinking, hey, this might be an issue for longer.
And now I'm not so sure where my money should go. This then leads us on to chapter two of this episode, which is, do you really need to be worried? What has happened in the past? I always find that humans behave in very similar ways, not always the same and not always predictably, but there is a reason why people say history tends to repeat itself.
Even if past performance isn't a guarantee of future success, It's worth taking a look down the line to see what happened when we had wars. What did it mean? And is there something to stress about? Now, I looked at 13 large geopolitical events that have happened in previous history. So I'm just going to show you some examples.
This included the Pearl Harbor attack, the Cuban Missile Crisis in 1962, the Iraq evasion in 1990. And when we looked at all of those, the worst performing one was Pearl Harbor, where the attack saw a drawdown of almost 20%. If you had invested $1,000 in the share market, you would have lost 20% of that over from the very peak of the market to the end of the crisis. You don't want that.
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Chapter 2: How do historical downturns inform current investment strategies?
Just let it ride out because at the end of the day, all the shares that you have bought, you still own the same number of shares. If you have a hundred shares of Apple, you still have a hundred shares of Apple, even if those shares are worthless. But as soon as you sell those shares, That's when you have solidified your loss. And we don't want to do that.
We don't want to take money from one place and put it into another investment fund or another company, because that's when we're saying, I accept this price for these shares and I'm going to sell them. We're not doing that. So first step, no contact with our investment portfolio. Second step of what we're going to do is we are going to fix up the leakiness in our buckets of our life.
There are, and you know this, you know this, and I know this, there are things that we are buying and spending money on that we don't even realize we are still doing. And the best word to describe this are subscriptions. I went into my Apple account and looked at all the app subscriptions that I was still subscribing to. There were $2,000 worth of subscriptions that I was paying for per year.
And they were things like apps that I had bought or like I had a period tracker app that was like a paid subscription for $99 a year. Like what was I doing? I don't need that. And so I just went through all of them and unsubscribed to everything and then calculated how much have I saved over the next year? $2,000. And maybe it's not that much for you. Maybe it's $500 a year.
Maybe it's $100 a year. Maybe it's $10 a month. But there are things that are leaky in your bucket. We all have them. We want to stop that right now. And step number three is using the money that you are saving from your leaky bucket to start putting towards a bit of an emergency fund, a little bit of a rainy day fund.
And yes, it kind of feels like it's raining right now with the cost of living crisis and the fuel crisis and like countries are rationing fuel. These things are, we have a war, we have multiple wars. You might be going some, it's too late for an emergency fund. And I just completely disagree. It is not too late to put $10 away a month, $20 away a month.
You find yourself saving some money here, put it away. Put it away until you at least have $500, until you at least have $1,000, maybe even $2,000.
And get to a point, ideally of three months living expenses, that it put aside for you because in times where things are really unpredictable, you're going to be a lot more calmer if you have a little bit of money saved up as a cash buffer versus the version of you that didn't even put anything away and And now times have gotten tougher.
Like, you know, touch wood, you got laid off or something terrible happened. You had a big expense and you just do not have the money to pay for it. And now you're trying to decide between, should I pay for my rent or my mortgage? Or should I like fix this expense? There's always an expense coming up. I mean, my, my car, again, another tire, $600. What's going on?
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