The Fog of Fog
Will the Iran war damage the stock market?
And will your portfolio be a casualty?
Regardless of whether this campaign lasts weeks or years, the answer is probably no.
Market declines triggered by geopolitical shocks usually don’t last very long. They tend to reverse, sometimes quickly, creating opportunities for investors who understand how markets actually behave.
History offers a useful perspective.
Below is a snapshot of several major geopolitical events over the past 80 years and the approximate level of the Dow Jones Industrial Average near the beginning and end of each event.
| Event | Start | DJIA Start | End | DJIA End |
| World War II | Dec 1941 | ~115 | Sept 1945 | ~192 |
| Korean War | June 1950 | ~215 | July 1953 | ~281 |
| Vietnam War | 1965 escalation | ~870 | April 1975 | ~770 |
| Iraq War | March 2003 | ~7,900 | Dec 2011 | ~12,200 |
| Afghanistan War | Oct 2001 | ~9,600 | Aug 2021 | ~35,000 |
| 9/11 Attacks | Sept 10, 2001 | ~9,605 | Dec 31, 2001 | ~10,021 |
| COVID Crash | March 23, 2020 | ~18,591 | Dec 31, 2021 | ~36,338 |
Some of these conflicts lasted years. Others were over quickly. Markets fluctuated along the way, sometimes violently.
But the broader pattern is clear.
With one notable exception, the market ended higher.
The exception is the Vietnam War period. Even there, the market’s weakness wasn’t primarily caused by the war itself. It reflected the terrible economic conditions that followed: stagflation, oil shocks, and deep recessions that stretched from the late 1970s into the early 1980s.
Wars create headlines.
Economics drives markets.
The Fog of War… and the Fog of Fog
As of March 1, 2026 — one day after the first strikes by the United States and Israel — no one knows how the Iran conflict will unfold.
There could be oil shocks.
There could be regional escalation.
Or the situation could stabilize faster than expected.
Even OPEC has already signaled a production increase in an attempt to stabilize oil prices.
At moments like this, the uncertainty isn’t just the traditional “fog of war.”
It’s more like fog of fog.
What Actually Moves Markets
If the stock market does crack during this conflict, the damage will likely come from economic pressures rather than the war itself.
Wars can act as catalysts. They can trigger volatility or amplify existing fears.
But the deeper drivers are usually economic.
And right now, there are plenty of those.
U.S. government debt remains historically high. Tariffs are disrupting global trade. Inflation remains stubborn in key sectors. Housing affordability is strained. Job creation has weakened. Artificial intelligence is rapidly disrupting parts of the labor market and capital allocation. Private credit markets face growing default risk. Manufacturing has been softening.
That’s a long list of structural pressures.
At the same time, wars historically increase government spending, which can stimulate economic activity.
Think of it as economic adrenaline.
Which force wins out is impossible to predict with precision.
Markets might fall.
Or they might continue climbing what investors often call the “wall of worry.”
Why Forecasting Is So Hard
Macroeconomic forecasting looks easy on television.
In reality, it’s extremely difficult.
If predicting markets consistently were simple, everyone would do it. Very few people get it right over long periods of time.
That’s why professional investors don’t rely on perfect predictions.
They rely on preparation.
The Real Job of an Investor
An effective portfolio manager — and that includes you managing your own portfolio — understands two things at the same time.
Risk always exists.
Opportunity always exists.
The goal is to structure your portfolio so you can survive the storms while still benefiting from the sunshine.
That balance is what allows compounding to work over long periods.
And it’s exactly the mindset we teach inside Compounders.