Do This RIGHT NOW during the Iran War
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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.
20% is a lot of money. But what was surprising to me and what you might think find somewhat of a comfort is that the average drawdown over these 13 really large political crises or geopolitical crises, they were down by 4.6% on average and lasted only six weeks. Let me say that in more simpler terms. When it comes to these horrible, catastrophic events, the impact that they have on the market is not as significant, where on average, you lose about 4.6% of your portfolio temporarily, may I add, and it tends to last six weeks before the market starts to come back up on the rise. Again, past performance doesn't mean that this will happen in the next six weeks. Please do not put in your calendar from six weeks from now, the market will recover, Sim said so.
But just historically, They're not things that last years or many years every single time. Sometimes they last longer, sometimes they last shorter.
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