The dogs of war are loose, but investors don’t need to run scared
Tuesday, 10 March 2026
Martin Hawes is a financial writer and presenter, and has written 25 personal finance books. He writes a weekly column.
OPINION: War and investing do not seem to go together. Investors like certainty and a conflict (even one on the other side of the world) gives a geopolitical background which is the very antithesis of certainty.
I think that people often see the outbreak of war as a jumble of geopolitical and economic chaos: the dogs of war are loose and mischief is afoot. War feels like a good time for investors to burrow deep and hide.
So it is at the moment. Since the havoc wrought by the highly predictable US/Israel attack on Iran, many people have said to me that now does not seem a good time to invest. Instead, now seems like a good time to hold cash; there is a mess of madness and who wants to invest into that?
Although these are scary times, history has shown that wars do not usually have a huge impact on investment returns. Even though there is usually a significant market fall at the start of wars, this mostly settles fairly soon. By some counts, there have been 20 significant wars that have affected markets in the last century or so. While there was an average drop of about 6% at the onset on share markets, most instances had more than recovered within 12 months and finished the war higher than they started.
Read more:
Markets are indeed down at the moment but that seems to be less caused by the actual war and more by economics: oil and gas may be in short supply leading to a rise in energy prices, leading to more inflation, leading to higher interest rates, leading to lower economic activity, leading to lower share markets.
That chain may be broken by the US and others quickly tapping other energy sources and/or getting critical sea lanes to reopen. If the production and transport of oil and gas is resolved and brought back to something near normal, markets should also normalise. Trump’s government will know this and push for a speedy resolution (Trump does not like share market losses!)
However, all of this assumes that there is not some other economic event which rears up. Such a “black swan” event (one that is completely unexpected) is possible at any time but seems more likely when there are fast moving and chaotic events.
Although war, politics and economics are messy and uncertain, I do not think that it is a time to burrow deep; instead, it is a time to largely continue with your investment strategy. Uncertainty increases but as history shows, during a war there are usually more good times on markets than there are bad times. You may want to exercise some additional caution but remember that caution may mean you miss opportunities. War is bad through and through with the only mitigation being that it does see advances in technology (for example, aircraft in World War I, radar in WWII, GPS in the Gulf War, etc.)
War creates great uncertainty but bear in mind that uncertainty can break either way.
KiwiSavers should continue to contribute. KiwiSavers are drip feeding their money into the markets gradually. Sometimes they will be buying their investments in times when markets are down (as they are at the moment) and sometimes when markets are up.
Those that are sitting on a lump sum to be invested should probably plan to drip their money in over a year or two starting now. This is called dollar cost averaging and has the effect of taking the timing out of decision making.
Investors who, like me, are fully invested ought to sit tight, or perhaps buy if they can. This current market weakness is not a time to sell.
Of course, successfully investing today always assumes that you are on the winning side of the war; it is a different story for those on the losing side. Here is a good example of what happens when a war is lost: on the wall of my office, I have a couple of framed stock certificates. These certificates are each for 100 reichmarks and are dated from January 2, 1941. At that time, as war raged 85 years ago, some nameless investor had invested 100 reichsmarks with the German government to help fund its war.
The money was supposed to be returned to the investor on January 1, 1946, but I doubt that there would be anyone reading this who would shed a tear for that investor whose investment was never redeemed. These certificates on my wall are Nazi Bonds and are now collectors’ items; I look at them often and I am thankful that the Nazis lost and the bonds were never repaid.
Martin Hawes is not a financial adviser and the information and opinions here should not be taken as financial advice.