Geopolitical Shifts

Staying the Course Amidst Rapid Change

March 2026

 
 

As the first quarter of 2026 nears its conclusion, we wanted to touch base regarding your investment portfolios. The markets are currently digesting rapid geopolitical shifts following this past weekend's military developments in the Middle East. Below is a breakdown of the current state of events along with current and historical market impacts.

What Has Happened:

  • Coordinated Strike: On Feb 28, U.S. and Israeli forces launched a massive offensive against Iran.

  • Leadership Decapitation: Initial Israeli strikes killed Supreme Leader Ayatollah Khamenei and IRGC Commander-in-Chief Ali Shamkhani.

  • Stated Objectives: Neutralize Iran’s nuclear program, destroy its naval capabilities, and terminate funding for regional proxy groups.

  • Current State: Iran has retaliated against 27 regional bases; the U.S. has confirmed at least four service member fatalities.

Recent Developments:

  • Troop Buildup: U.S. military presence in the Middle East is now at its highest level since the 2003 Iraq invasion.

  • Duration: President Trump projected a four-week timeline, though the Department of War has not ruled out ground operations.

  • Political Friction: Congress is expected to vote this week on War Powers resolutions which are unlikely to pass, but creates headline volatility.

Current Market Impacts:

  • Energy Risk: Markets are pricing in potential disruption to the Strait of Hormuz, where ~20% of global oil travels through. A total blockage would require COVID-scale demand destruction to offset.

  • Relative Resilience: As a net energy exporter, the U.S. is fundamentally better positioned than the UK, Japan, or the Eurozone.

  • Travel: Regional air travel is effectively halted; major carriers have suspended all flights in the conflict zone.

Historical Context:

  • Short-Lived Volatility: Geopolitical shocks typically trigger sharp but brief sell-offs. Average drawdowns are ~5-6% with recovery usually within 35 days.

  • Worst-Case Benchmarks: 1990 Gulf War: The steepest historical impact; S&P 500 saw a 20% drawdown but fully recovered within 5 months.

    •  Post-9/11: Markets saw immediate shocks but were up 12% six months later.

The Bottom Line: Outside of major world wars, geopolitical events rarely break the long-term structural trend of the S&P 500. Market weakness typically lasts only 8–15 days before mean reversion begins.

While periods of heightened volatility can be unsettling, they also provide a constructive environment to ensure your long-term wealth strategy remains aligned with your objectives. We view the current environment as an opportune time to review your plan and ensure we are positioned to navigate these shifts effectively.

As always, we are here to discuss these developments or any questions you may have.

This information does not constitute legal or tax advice. Prime Capital Investment Advisors, ("PCIA") and its associates do not provide legal or tax advice. Individuals should consult with an attorney or professional specializing in the fields of legal, tax, or accounting regarding the applicability of this information for their situations. Advisory products and services offered by Investment Adviser Representatives through Prime Capital Investment Advisors, LLC (“PCIA”), a federally registered investment adviser. PCIA: 6201 College Blvd., Suite#150, Overland Park, KS 66211. PCIA doing business as Prime Capital Financial | Wealth | Retirement | Wellness | Family Office | Tax Advisory.