If I told you, without letting you look at the stock market, that there are two active wars running right now (Russia still in Ukraine, and a new US-Iran conflict that started in late February) and that oil spiked above $100 a barrel during a Strait of Hormuz blockade, what would you guess the market has done?
Most people would say it crashed.
The S&P 500 closed at an all-time high of 7,126 on Friday, its third straight week of gains. It did drop about 8% when the Iran war started. Then it recovered everything and kept going.
This is the problem with connecting headlines to portfolio decisions. The market isn’t pricing what’s happening today. It’s pricing a distribution of possible futures, and it moves when those expectations change. By the time the news feels conclusive, the price has already reflected it.
The response to all of this isn’t to be clever. It’s to be set up in a way that makes you indifferent to the next headline.
Stay invested. Only put money into stocks that you won’t need in the next five years. Make sure you’re adequately insured. Keep at least six months of emergency funds in cash.
That’s it. If those four things are in place, the next headline isn’t a portfolio decision.