A Guide to Investing During Geopolitical Uncertainty
By Brian Famigletti, Managing Director & Head of Marketing
Unpredictable Outlook vs. Historical Precedence
Investing during geopolitical uncertainty can create anxiety for individuals and managers alike. But while the headlines can feel destabilizing, historically speaking, market reactions are often more muted than expected.
To be sure, past performance never guarantees future results. But CIO Research finds that most geopolitical events have not led to lasting market disruptions, and equity markets have historically recovered fully within a few months to a few years.
Near-term volatility is par for the course, as seen in the wake of several recent shocks, but it does not always translate into long-term damage. For example, the Liberation Day tariff announcements in April 2025 stoked geopolitical turmoil and sparked widespread fears of an international trade war, sending markets plummeting in its wake. But major indexes had nearly recouped their losses by month-end, and ultimately finished the year with double-digit percentage gains.
Over the past several decades, the most severe and persistent market drawdowns have tended to coincide with recessions rather than geopolitical crises, per CIO. While uncertainty can weigh on investor sentiment, economic fundamentals usually play a larger role in shaping sustained market trends.
Near-Term Risks vs. Long-Term Goals
This history suggests that reacting emotionally to geopolitical news may lead to poor timing decisions. Selling into volatility can lock in losses and reduce the ability to participate in recoveries.
CIO Research emphasizes the importance of maintaining alignment with long-term plans, especially during turbulent periods. For the past eight decades, markets have weathered even the worst market downturns, the firm notes. In every instance over that period, sufficiently diversified portfolios have fully recovered within 3 to 5 years.
That’s not to say there aren’t near-term risks to geopolitical volatility. But rather than trying to time the market, investors’ energy may be better spent on liquidity planning, to help manage those risks without undermining long-term positioning.
Maintaining sufficient cash, high-quality bonds, or borrowing capacity to fund near-term spending needs may reduce the pressure to sell long-term investments during market stress. This approach can provide flexibility while allowing growth-oriented assets time to recover.
Building Resilient Portfolios for Uncertainty
Ultimately, the biggest financial risk of geopolitical uncertainty may well be action bias. Investors can feel compelled to make changes simply to regain a sense of control. But major allocation shifts typically warrant careful consideration and professional guidance.
Rather than trying to predict geopolitical outcomes, diversification across asset classes, regions, and investment styles can help reduce reliance on any single outcome or market driver. Global equities and emerging markets are potential portfolio diversifiers during periods of heightened uncertainty. Within fixed income, agency mortgage-backed securities and commercial mortgage-backed securities may be worth a look.
These guidelines reflect expectations around economic resilience and market structure, but they are not guarantees. The market’s outlook is always uncertain, particularly amid heightened volatility. But a thoughtful, disciplined financial plan tailored to your unique situation and goals is the closest there is to a sure thing.
If you’d like help evaluating your portfolio strategy during periods of geopolitical uncertainty, schedule a consultation with Griffin Asset Management today.
Sources:
UBS: Managing wealth through crisis and war
Morgan Stanley: How to Plan Instead of Panic in Volatile Markets
