Investing During War: Stocks, Gold, Commodities and Crypto
Geopolitical conflicts and wars have repeatedly shaken financial markets, often triggering sharp selloffs, spikes in oil prices and widespread investor panic. One of the most well-known recent examples was the Russia-Ukraine war in 2022, when global markets fell sharply, energy prices surged, inflation accelerated and recession fears spread across major economies.
The S&P 500 dropped by around 5-10% during the invasion span. The war triggered a global energy crisis, slashed global trade growth and cost the global economy an estimated $1.3 trillion in 2022, creating massive inflation and supply chain shocks (Business Standard).
History Shows Markets Recover
Within a year, many global markets had, however, recovered a large portion of their losses and several sectors such as energy, defense and commodities delivered strong returns. Similar patterns were observed during the COVID-19 market crash, the Gulf War, the Iraq War and even after the 9/11 attacks. Markets initially declined due to uncertainty but later stabilized as economies adjusted, supply chains reorganized and governments introduced policy support.
Core Principle of Investing: Markets Fall on Uncertainty but Rise on Time
This pattern highlights an important investing reality. Periods of uncertainty often push investors toward cash and defensive assets, but they also create opportunities for long-term investors willing to accumulate assets at lower valuations. Markets tend to recover, economies adjust and investors who deploy capital during periods of fear often generate the strongest long-term returns.
As of now, global markets are again facing geopolitical uncertainty related to Middle East tensions involving Iran, Israel and the United States, along with rising oil prices, inflation concerns and increased volatility across equities and bonds. The short-term outlook remains uncertain and geopolitical clarity may take months or longer. However, long-term investing has never depended on geopolitical clarity, it has depended on strategic asset allocation and time in the market.
Wealth is Built by Investing During Uncertainty, Not During Euphoria
Long-term investors who continue investing during downturns often outperform those who try to time the market. Historical data shows that if you invested in the S&P 500 (including dividends reinvested) in 1926, the annualized return through 2026 is about 10.41% per year, despite wars, recessions, crises and pandemics (S&P 500 Official Data).
A smart strategy right now is asset allocation across multiple asset classes, rather than betting on a single market direction.
Below are three asset classes investors can consider in the current environment.
Sector-Specific and Broad Market Equities
During geopolitical conflicts and war-driven market downturns, not all equities move in the same direction. While broad markets often decline due to uncertainty, certain sectors such as defense, energy, infrastructure and cybersecurity tend to perform relatively better due to increased government spending and rising energy demand. Companies like Lockheed Martin LMT, Northrop Grumman NOC, ExxonMobil and Chevron Corporation often benefit during such periods. At the same time, broad market equities and large-cap companies like Apple AAPL and Microsoft MSFT provide long-term growth opportunities when markets fall. A gradual, systematic investment approach during downturns is often more effective than trying to time the market bottom.
Gold and Commodities
Gold and commodities have historically acted as hedges during geopolitical uncertainty, inflation and currency volatility because wars often disrupt supply chains, energy routes and global trade. In 2026, Middle East tensions pushed oil prices higher and increased volatility across commodities, while gold and silver saw strong safe-haven demand during peak uncertainty. Commodities such as crude oil, natural gas, gold, silver, copper and agricultural products often rise during geopolitical shocks and inflationary periods. Including commodities in a portfolio helps diversify risk because commodities sometimes perform well when equity markets are volatile, making them useful for asset allocation during uncertain global environments.
Cryptocurrency (High Risk, Small Allocation)
Cryptocurrency has emerged as a new alternative asset class over the past decade. In some geopolitical situations, crypto assets have seen increased demand due to currency instability, capital controls, inflation concerns and distrust in traditional financial systems. Major cryptocurrencies such as Bitcoin (BTC) and Ethereum (ETH) are often viewed as long-term digital assets, while others like Solana (SOL) and Polygon (POL) are linked to blockchain infrastructure and decentralized applications.
In early 2026, major cryptocurrencies such as Bitcoin and Ethereum were highly volatile and declined during market sell-offs. However, such corrections are common in crypto markets and often create long-term accumulation opportunities. Historically, many of Bitcoin’s strongest long-term gains have come after major corrections, which is why long-term investors often use market declines to gradually accumulate rather than invest during euphoric rallies. The key with crypto is “position sizing”, a small allocation that can add potential high growth to a portfolio without significantly increasing overall portfolio risk.
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Lockheed Martin Corporation (LMT) : Free Stock Analysis Report
Northrop Grumman Corporation (NOC) : Free Stock Analysis Report
Apple Inc. (AAPL) : Free Stock Analysis Report
Microsoft Corporation (MSFT) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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