War and Investing: What Happens to the Markets?
If you’ve found yourself wondering whether global conflict will derail markets or destroy long-term investing plans, you’re not alone.
In the video below, I unpack this exact question and explain what happens to markets when war breaks out, and why the reality is often very different from what our instincts tell us.
👉 Watch the full video here
While war is deeply tragic and disruptive in many ways, its impact on long-term investing is often far smaller than people imagine.
The first reaction markets have to war
When conflict erupts, markets usually respond in a very human way.
They panic.
In the short term, markets are driven largely by emotion and uncertainty.
Investors hate uncertainty and react quickly to news, speculation and fear about what might happen next.
And war introduces a lot of unknowns.
Will supply chains be disrupted?
Will oil prices surge?
Will economic growth slow?
Will inflation rise?
Because of that uncertainty, markets often experience an initial drop or burst of volatility.
Prices move sharply up and down as investors react to the news.
This first phase is sometimes called a “flight to safety.”
Money moves away from riskier assets and toward things perceived as more stable.
You may see investors shifting into:
- US dollars
- Swiss francs
- Government bonds
- Large developed markets
At the same time, emerging market currencies or riskier investments may fall.
Short-term market movement is about EMOTIONS.
And emotional market movements rarely tell the full story.
The moment when investors start thinking again
After the initial shock, something important begins to happen.
Investors pause and reassess.
They step back from the headlines and start asking more grounded questions.
How large is the conflict?
How long might it last?
What are the real economic implications?
Which industries will be affected?
This reassessment phase often stabilises markets.
We saw this very clearly when the Russia-Ukraine war began. The initial shock created fear across global markets. But as investors absorbed the reality of the situation and evaluated the economic fundamentals, markets adjusted and moved forward.
This is the point where we begin to see the difference between short-term emotion and long-term economic value.
What history shows us about markets during war
If you look back through history, you’ll notice a remarkably consistent pattern.
Markets often experience:
- An initial drop
- A period of stabilisation
- A recovery
In many cases, stock markets have delivered strong returns during periods of war.
That may sound surprising.
Remember what the stock market actually represents.
It represents companies.
Companies that produce goods.
Companies that provide services.
Companies that continue operating even when the world feels uncertain.
Long-term market movement is about VALUE
What companies are delivering value in the economy.
Wartime spending can even stimulate parts of the economy.
During World War II, for example, equities delivered very strong returns as governments dramatically increased production, infrastructure and industrial spending.
This doesn’t minimise the tragedy of war. But economically speaking, markets are remarkably resilient.
How war affects the broader economy
That said, conflict can still influence certain economic forces.
One of the biggest is energy prices.
Wars that affect major energy regions or supply routes can create shocks in the oil market.
For example, Iran sits beside the Strait of Hormuz, one of the most important oil transit routes in the world. Roughly 20% of the global oil supply moves through this narrow shipping channel.
If that route were disrupted, millions of barrels of oil could temporarily disappear from global markets, pushing prices sharply higher.
We saw something similar during previous tensions in the region, when oil prices surged above $100 per barrel.
Higher oil prices can ripple through the global economy, increasing:
- transport costs
- production costs
- inflation
At the same time, governments often increase spending significantly during conflict, particularly on defence, logistics and infrastructure.
And that can stimulate certain sectors.
Which industries tend to benefit
Some sectors historically perform well during periods of conflict.
Defence is the most obvious example. Governments increase spending on military equipment, aircraft, cybersecurity systems, drones and infrastructure.
Energy companies can also benefit if supply disruptions push oil and gas prices higher.
And demand often increases for commodities such as steel, copper and agricultural products as governments ramp up production and infrastructure spending.
This is one of the reasons broad market index trackers work so beautifully.
They automatically adjust to changing economic conditions.
As certain sectors grow in demand, they naturally rise within the index.
You don’t need to predict which industry will perform best. The market itself adjusts.
Which industries can struggle
Of course, not every sector benefits.
Industries that rely heavily on consumer confidence often face challenges during periods of uncertainty.
These can include:
- Airlines and travel companies
- Tourism
- Consumer discretionary spending
- Global manufacturing if supply chains are disrupted
When uncertainty rises, people tend to postpone large purchases, renovations or luxury spending.
But again, this is precisely why diversification matters.
When you invest broadly across global markets, no single sector determines your entire outcome.
The investing lesson most people miss
The most important thing long-term investors need to protect during periods of global tension is not their portfolio.
It’s their confidence.
Because reacting emotionally to headlines is one of the fastest ways to damage long-term returns.
Markets have already survived extraordinary events:
World War I
World War II
The Cold War
The Gulf Wars
Financial crises
Pandemics
Geopolitical tensions across decades
And yet long-term equity markets have continued moving upward over time.
This is why my own strategy doesn’t change when geopolitical events occur.
I don’t try to predict the market.
I don’t try to guess which sector will win.
I simply continue doing the things that build wealth over time:
Consistent investing.
Low-cost index trackers.
Long-term patience.
This is a topic that comes up quite often inside the Wealth Builders Club, where we regularly talk about how global events impact investing.
What we always come back to is the same simple truth:
The most powerful investing habit is consistency.
Not reacting to the news cycle, not trying to time markets, and not jumping in and out based on fear, but calmly continuing to invest in the future you want to build.
The beauty of simple investing systems
One of the reasons I love automated investing systems is that they remove the emotional drama from the process.
You don’t have to make constant decisions.
You simply:
Create a spending plan.
Automate your investing.
Keep showing up consistently.
That’s it.
And when markets move up and down, which they inevitably will, those automated investments allow you to benefit from volatility rather than fear it.
You keep buying assets over time.
You keep building ownership in the global economy.
You keep allowing compounding to quietly do its work.
If you haven't yet mastered your Savvy Investing habits, go watch this FREE Investing Masterclass on how to set up your automated investing and what to invest in to ensure your financial future is sorted.
The real focus: building your wealthy life
At the end of the day, the purpose of investing isn’t to outsmart the news cycle.
It’s to build a life that feels truly wealthy.
A life where your money supports your freedom.
Where your systems quietly work in the background.
Where your future self is being taken care of, even while the world continues doing what the world does.
Because the truth is, geopolitical events will always exist.
But so will innovation.
So will businesses.
So will people building, creating and contributing.
And by investing consistently in that long-term human progress, you are participating in something far bigger than any single news headline.
With love,
Ann x
P.S. If you haven’t yet mastered your Savvy Investing habits, this is one of the most important places to start. I’ve created a free masterclass where I walk you through how to set up your automated investing and what to invest in to ensure your financial future is sorted.
👉 You can watch it here
