Hey everyone! Today, we’re diving into a hot topic: how geopolitical conflicts are affecting the stock market—especially the S&P 500—and what it means for your investments.
If you love market insights, make sure to subscribe, hit that like button, and check out more resources at benjamancow.com. Let’s get started!
The Big Three in Stock Investing
Since 2019, I’ve emphasized three critical factors to consider when investing:
- The labor market
- Inflation
- Geopolitical conflicts
The first two are easier to track, but geopolitical conflict is unpredictable. While I’m not an expert in global politics, the reality is that these conflicts can have long-term impacts on markets, especially when combined with other economic pressures.
Why Oil Prices Matter
Rising oil prices in a late business cycle often signal trouble. Historically, when oil spikes toward the end of a cycle, recessions often follow. While early-cycle oil price jumps can be bullish, in a late-cycle environment, it can worsen inflation—just as we’ve seen recently.
Combine this with a weakening labor market, and the Fed faces a challenging balancing act. Factor in partial government shutdowns and global conflicts, and you see why the market’s behavior has become harder to predict.
Market Cycles Are Complex
Markets rarely move in a straight line. Peaks and corrections happen in stages:
- The stock market topping process is slow and drawn out.
- Market bottoms tend to happen quickly.
Examples from history, like 2007, 2018, and the dot-com era, show that markets often sweep highs before major corrections. Bitcoin shows a similar cyclical pattern—peaks followed by consolidation—illustrating that short-term moves rarely define long-term trends.
Opportunity Cost Matters
While stocks can rise, sometimes there are better opportunities elsewhere. Over the past few years, the S&P 500 has underperformed gold by nearly 50%, and the NASDAQ by 44%. This isn’t a bearish prediction—it’s about knowing where your money works hardest.
Even Bitcoin shows that small rallies don’t always translate to durable gains. Historical patterns suggest a possible drop of 30–35% against gold before stability returns.
Final Thoughts
No one can predict exactly when a market crisis will hit. It could be sudden or drawn out. But escalating geopolitical conflicts, rising inflation, and a weakening labor market could accelerate a downturn. The key is staying informed and understanding market cycles.
Markets climb walls of worry, but long-term investors know: bearish headlines often hide opportunity.
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