The FTSE 100 recently dropped below 10,000 and it was briefly in what the financial world calls “correction territory.”
That’s when a market falls by 10% or more from its recent high – in this case, from the record of just under 10,935 set at the end of February.
(I always found that description slightly odd. A correction. As if the market was somehow wrong before and is now putting itself right. But hey, that’s just an aside.)
What’s driving it is no mystery. The conflict in the Middle East has escalated sharply. The Strait of Hormuz – the narrow waterway through which roughly a fifth of the world’s oil supply flows – is effectively blocked.
Oil prices have surged past $113 a barrel. And when energy prices spike, everything else gets more expensive, more uncertain, and more volatile. Stock markets don’t like uncertainty, and right now there’s plenty of it.
If you’re watching the headlines and feeling a knot in your stomach, I have to tell you: that’s completely normal. Nobody enjoys watching the value of their portfolio fall, even temporarily. And I’m not going to insult your intelligence by pretending this doesn’t feel uncomfortable.
But I do want to share something with you that I think puts moments like this into proper perspective.
What history actually tells us
A dataset I came across recently, compiled by Charlie Bilello looks at S&P 500 total returns following the start of every major US military conflict since Pearl Harbor. We’re talking about events that, at the time, felt genuinely frightening – the Cuban Missile Crisis, the Gulf War, 9/11, the invasion of Iraq, and many more.
The numbers are revealing.
Source: Charlie Bilello – Creative Planning
On average, across all of those conflicts, the market was up 7% six months later. Up 11% after one year. Up 46% after three years. And up 94% – nearly double – after five years.
Even the worst-case scenarios recovered. After the Yom Kippur War in 1973, markets were down 14% in six months and down 41% in one year. Painful.
But five years later? Up 18%. Ten years later? Up 152%.
Now, the FTSE 100 isn’t the S&P 500, and past performance isn’t a guarantee of future results. But the broader point holds: markets have weathered wars, oil shocks, recessions, pandemics, and political crises of every description. They’ve come through all of them.
Zoom out
When you’re inside one of these episodes, it feels deeply uncomfortable. The news is relentless. The numbers on the screen are red. And there’s always someone on social media predicting the end of the world.
But zoom out – even just a little – and the picture changes dramatically. The FTSE 100 is still up around 15% over the past twelve months, despite this pullback. It broke through 10,000 for the first time ever only in January.
The long-term trajectory, for all its bumps and lurches, has only ever pointed in one direction.
The temptation in moments like this is to do something. To reduce risk. To move to cash. To wait until things “settle down.” I understand that impulse entirely.
But the evidence – decades and decades of it – tells us that the real risk isn’t staying invested through volatility. It’s stepping out and missing the recovery.
What we’re doing
Your portfolios are built for exactly this kind of environment. They’re diversified across asset classes, geographies, and sectors. They’re designed to absorb short-term shocks and capture long-term growth. That hasn’t changed, and we’re not making any knee-jerk adjustments.
If you have questions or simply want to talk things through, we’re here. That’s what we’re for. Give us a call or drop me an email anytime.
Until then, try not to check your portfolio too often. Resist the temptation to check your valuation, go for a nice walk instead!
The markets will still be there when you next check – and history suggests they’ll be higher.
Hazel Scarff
Chartered Financial Planner
