Investing during turbulent times: A journey of FIRE (financial independence retire early)…
Warren Buffet: “Our favorite holding period is forever.”
It’s the middle of March 2026, and the US/Israel-Iran War is ongoing. As expected, the global stock markets are doing their usual, that is, reacting to every little happenings and news, whether positively or negatively.
Markets have generally reacted negatively over the past few weeks since the beginning of this war. As more and more experts are commenting about the ramifications of this war as related to the economy, I’m left exasperated at how this playbook is used every single time something happens in the world.
We’ve certainly seen this play out many times over, just in the past 5+ years since our early retirement. Those were: COVID-19 pandemic, Russia-Ukraine War, market crash of 2022 due to the financial bubble bursting after the pandemic, Israel-Palestine Conflict, just to name a few.
It seems every time a new event happens, media seems to call it a world changing event. Although this may be true, it’s also important to remember that that is exactly the job of the media to make people panic.
Maybe this is how the world works. Get the small fish (the people) to live in fear and panic, and maybe the big fish (those people who control the little people) get to make more money. How many times have we all seen the small fish panic buying during so called weather events like tornadoes, hurricanes, blizzards where we see and hear stores running out of water and toilet papers???
Sure, there are some people out there still preaching calm, to look at all events as just one of many we’ve dealt with in the past. Unfortunately, these people are too few and far between.
What I see played out in media, is same playbook played out every time something happens. The media proclaims this event is “the One”, where life as we know it, will never be the same.
When the little fish is panicked, they will listen to the big fish better. This is what propels them to do unwise things like panic buying for toilet paper, or sell all stocks to convert to cash.
I don’t really know if the end goal for the big fish is to have the little fish panic sell stocks so they can buy these same stocks at lower prices or not. Although it makes sense, right? What I do know, is this act of panic that propels someone to sell when they shouldn’t, is definitely not helped by the media when they’re covering this new event 24/7.
After every major recession, the rich got richer while the little fish lost their possessions. Why? Because when you panic sell when market is down, you’re guaranteed to lose your money.
For the rich people, they can simply scoop up lower priced whatever (homes, stocks, bonds, cryptocurrencies, etc.), which will go up in value later on. Does that make sense? If I was the big fish, this is exactly what I would do to make serious money.
So, coming back to this new event, US/Israel-Iran War, what changed? Sure, the Strait of Hormuz is very important to the world’s oil markets, and therefore the economies of the world. I don’t doubt that.
What bothers me is the sheer panic induced reporting by the media again proclaiming the end of all world economies, if the Strait of Hormuz were to be blockaded by Iran. Let’s take a breather and calm down, everyone!
This isn’t the first conflict or war we’ve dealt with, nor will this be the last. If you look at this chart below that show all major world events in the past 100 years and how they affected the stock market, you’ll see why you shouldn’t panic. (From the website: www.madisontrust.com)
No matter what the event was, we made out just fine. Sure, markets always drop during these events, but then they recover, only to go up higher in each case. The recent Coronavirus pandemic event was no exception, but so were any other major events since like the Russia-Ukraine War.
What most people forget each and every time something happens in the world, is that the stock market moves forward, each and every time. The time it takes to move forward is really the unknown here.
On average, markets recover after a prolonged downturn in roughly 13-14 months, although there have been exceptions. For example, after the Covid-19 pandemic hit the U.S., the markets recovered in around 5-6 months, while the Great Recession took around 3-4 years.
As much as the media would have you believe that this particular event is the one that changes the course of human history, I beg to differ. There will always be something that happens, somewhere in the world.
What’s important is to stay steadfast in your investing goals, and to not deviate from them. Here are some important things to remember about investing during turbulent times:
- Your goal is to stay invested at all times in the stock market
One of the dumbest things you can do is to panic when everyone else does, then sell when market is lower. Stop panic selling, and stop following the herd!
You have to consider that some of the biggest stock market gains happen after biggest drops. If you sell stocks to sit out of the market, then there’s a good chance you’ll miss this big gain.
There are plenty of reports out there that clearly show the correlation between staying invested for biggest gains over the long term. There’s even a famous saying that a dead man is a better investor than a live one, because a dead man won’t constantly sell and buy.
Like I always like to say, doing nothing is usually the best course of action when you’re investing for the long term. Believe in the power of American companies to find ways to make money, and believe in your process, that is, stay invested at all times.
- Your goal is to think long term
Stock market moves up and down all the time. If you look at each day, or a week, the market looks very volatile.
However, if you look at a longer period of time, like say 5 years or longer, then the general trajectory of the markets have been trending up. This, is the reason why you have to invest for the long term.
The bellwether of the US economy has been the S&P 500 index, tracking the 500 largest American companies. This index has returned on average 10% per year on average.
The longer you stay invested, the better your chance of success! Always think long term, and stop being swayed by the media, the news, or your friends/family.
- Your goal is to stay consistent, to always look to buy more stocks
Some of the best investors in the world stick to a strict program of proper investing strategies. Such strategies are looking to buy quality companies, always investing in the market, looking for opportunities whenever the market drops, and looking at investing long term.
With these set of firm beliefs, you’ll be able to weather the storm while reaping the benefits of investing, no matter what the conditions are. It shouldn’t sway you when the market is up or down, when there is a novel world event, or when there is so much fear mongering going on by the media.
Look to buy more stocks when markets are down, as you’ll be buying these at a discount. Look to invest for at least 10 years or more, and don’t be swayed by the latest news, tips, etc.
Sometimes staying the course is the hardest thing to do when investing. It feels wrong to sometimes be contrarian. When people are dumping stocks, you should be buying quality stocks. When the media tells you this event will be world changing, take that with a grain of salt and just go on your way.
Investing, especially for the average Joe (like me), should be boring. You don’t want to get into things you don’t understand like borrowing money to buy stocks or other assets (using leverage), get into the latest cryptocurrency, or buy the latest fad stock.
Keep to your guns, and keep buying the S&P 500 index fund, especially if you’re an average Joe. Do this for 30-40 years and you’ll be well off compared to most Americans.
Investing should be easy and boring, but that doesn’t mean the process doesn’t work. We need to be changing our behaviors (financial and mental) to consider living well below our means so you can save the money to invest.
In conclusion:
It’s never easy seeing your money go down in value when a novel world event happens, like the current US/Israel-Iran War. As painful as that may be, it’s important to realize that like most things in life, nothing is forever.
What seemed so “world changing” while we’re living through it, doesn’t seem like it after several months, or years. The mantra “It too shall pass”, is something that helps me deal with most situations in life, and in investing life.
Keep doing the right things as mentioned above, think long term, buy (always buy), and stay invested in the market. Remember, even during down markets, you still get dividends if you own S&P 500 index fund.
When markets eventually recover, your investments will grow even faster than before. Hope this post helps calm your nerves during these turbulent times.
Thank you for reading and good luck in your journey of FIRE (financial independence retire early)!
Jake
Wandering Money Pig
