Welcome to Hoxton Wealth, the new home of Hoxton Capital
Staying the Course in Uncertain Times: What the GCC Conflict Means for Your Portfolio
Hoxton Blog • Staying the Course in Uncertain Times: What the GCC Conflict Means for Your Portfolio
Geopolitical headlines from our own backyard in the GCC are unsettling, especially when they involve missiles, drones, and strong language between regional powers. It is natural to wonder: What does this mean for my investments? Should I be doing something now?
In this note, I want to do three things:
-
Put the current GCC conflict into a market context.
-
Show how markets have behaved in past crises, including the COVID crash, the Russia-Ukraine war, and the April 2025 selloff and rebound.
-
Explain why your portfolio is built to withstand these episodes without needing to “panic trade”.
What is happening in the GCC and how have markets reacted?
The latest escalation in the GCC region has primarily been expressed through targeted missile and drone strikes, heightened rhetoric, and concerns around energy infrastructure and shipping routes. For investors, the key questions are always the same:
- Does this significantly change global growth?
- Does it significantly change inflation?
- Does it significantly change corporate profits?
So far, the market reaction suggests that investors see this as a serious but contained regional shock rather than a global turning point:
- Local GCC equity markets have seen bouts of risk-off selling, particularly in financials and cyclical sectors, while defence and energy-related names have been more resilient.
- Global markets have reacted with brief spikes in volatility rather than sustained declines. Risk assets tend to wobble on headlines and then stabilise once investors reassess the underlying economic impact.
- Oil and gold have picked up as investors look for classic geopolitical hedges, but moves so far have been far from “crisis” extremes.
In other words, markets are acknowledging the risk, but not pricing in a global breakdown.
What history tells us: markets and crises
When you are in the middle of a conflict, it feels unique. From a market perspective, however, we have seen versions of this movie before. The pattern is remarkably consistent:
Shock → selloff → adjustment → recovery.
Russia Ukraine war (2022–present)
When Russia invaded Ukraine in February 2022, markets reacted sharply. Energy prices spiked, European equities dropped, and headlines focused on worst-case scenarios. Yet:
-
Global equity markets, after an initial decline, began to stabilise as investors understood the likely scope of sanctions and energy rerouting.
-
The S&P 500, for example, was lower in the weeks around the invasion, but within months, markets were once again driven more by interest rates and inflation expectations than by the conflict itself.
-
Over time, the war became a persistent risk, but not the dominant driver of returns.
COVID19 crash (2020)
The COVID shock remains one of the clearest examples of how quickly markets can fall, and how quickly they can recover.
-
In February–March 2020, global equities fell more than 30% in a matter of weeks as economies locked down.
-
At the time, it felt like a once-in-a-century collapse, and many investors capitulated near the lows.
-
Yet, thanks to massive fiscal and monetary support, markets bottomed in late March and then staged a powerful rebound. By August 2020, US equities had already recovered their losses and went on to end the year at new highs.
The key lesson: the market turned months before the economic data or the news flow looked “comfortable”. Investors who waited for certainty paid a heavy price.
S&P 500 After Major Geopolitical Events
3. Why trying to time the market rarely works
Episodes like the GCC conflict, the Ukraine war, COVID, or the April 2025 drop have something in common: they create powerful emotional pressure to “do something”.
The problem is that “doing something” often means trying to time the market:
- Selling after markets have already fallen, locking in losses.
- Waiting on the sidelines for clarity, then re-entering after markets have already bounced, missing a big part of the recovery.
Looking at the data since 1950, the impact of missing just the best 50 or 100 market days is striking. The difference in outcomes compared to staying fully invested is significant.
This period includes major geopolitical crises, recessions, financial crashes, wars, and systemic shocks. Yet despite all of this, markets have consistently recovered and moved higher over time.
The key takeaway is simple: timing the market is extremely difficult, and missing only a small number of strong recovery days can materially reduce long-term returns. History shows that markets ultimately reward patient, disciplined investors who remain invested through cycles rather than trying to trade in and out.
To benefit from timing, you need to be right twice: when to get out and when to get back in. Even investment professionals struggle with this; for most long-term investors, it simply isn’t a realistic or necessary strategy.
Instead, the evidence supports a different approach:
- Accept that volatility is the price of long-term returns.
- Stay invested in a diversified portfolio aligned with your risk tolerance.
- Make changes based on your long-term goals and personal circumstances, not on the latest headline.
To benefit from timing, you need to be right twice: when to get out and when to get back in. Even investment professionals struggle with this; for most long-term investors, it simply isn’t a realistic or necessary strategy.
Instead, the evidence supports a different approach:
-
Accept that volatility is the price of long-term returns.
-
Stay invested in a diversified portfolio aligned with your risk tolerance.
-
Make changes based on your long-term goals and personal circumstances, not on the latest headline.
4. How your portfolio is positioned today
Against this backdrop, it is important to understand how your portfolio is actually exposed to the current conflict.
Limited exposure to the affected region
Our core portfolios have minimal direct exposure to the areas currently in conflict:
-
We focus primarily on large, diversified developed markets such as the United States, Europe, and the UK.
-
Exposure to emerging markets – including the GCC region – is minimal and diversified and is not concentrated in any single country or sector.
-
Within any regional exposure, we emphasise robust balance sheets, strong governance, and businesses with global revenue streams, rather than purely domestic, high-risk plays.
This means that while we monitor developments in the GCC closely, your portfolio is not “tied” to the fortunes of the conflict zone.
Snapshot of Balanced portfolio
Gold as a strategic shock absorber
Gold plays a specific role in our asset allocation:
-
Historically, gold has often acted as a hedge during periods of geopolitical tension and market stress.
-
It is not perfectly correlated with equities or bonds, which means it can provide diversification benefits when other assets are under pressure.
-
In inflationary or stagflationary environments, gold can also help preserve purchasing power.
We do not hold gold because we are “betting” on crises. We hold it as a strategic diversifier precisely because crises are unpredictable.
Performance of Gold, Stocks, and Bonds in Major Crises
Performance of Gold, Stocks, and Bonds in Major Crises
5. Why we use collective investment vehicles, not concentrated bets
Another key element of resilience in your portfolio is how we invest, not just where.
Rather than trying to pick a handful of individual stocks to “win” or “lose” from geopolitical events, we primarily use collective investment vehicles – for example, funds and ETFs.
This has several advantages:
-
Diversification by design: One fund can hold hundreds or even thousands of underlying securities across sectors, countries, and themes. A single corporate shock has a far smaller impact on your overall portfolio.
-
Reduced idiosyncratic risk: Company-specific events – regulatory fines, governance issues, earnings surprises – are diluted within a diversified pool of holdings.
-
Professional risk management: Each fund has a dedicated management team, risk controls, and regulatory oversight. We then construct your overall portfolio by blending these components, creating diversification at two levels.
-
Efficient implementation: Collective vehicles allow us to adjust exposures (e.g., between regions, styles, or asset classes) in a cost-effective and transparent way, rather than trading many individual names.
The net result is that your portfolio is designed to be stable at the total level, even when individual markets, sectors, or companies are experiencing sharp moves.
6. What we are doing – and what you should do
From our side, we are:
-
Monitoring developments in the GCC and their potential impact on global growth, inflation, and energy markets.
-
Stress testing portfolios to ensure that risk remains consistent.
-
Looking for opportunities that can arise when short-term fear pushes high-quality assets to attractive valuations.
From your side, the most valuable actions are often the simplest:
-
Stay focused on your long-term objectives: retirement, education funding, wealth preservation, or growth.
-
Avoid making big decisions based purely on short-term news flow.
Final thoughts
Geopolitical events are unsettling, especially when they are close to home. Markets will likely continue to react to new developments, and we should expect periods of volatility.
However, history shows that:
-
Markets have repeatedly absorbed wars, pandemics, political crises, and shocks – and gone on to make new highs.
-
Short-term market timing in response to fear is rarely rewarded.
-
A diversified, globally oriented portfolio, with prudent use of assets like gold and collective investment vehicles, is one of the most effective ways to navigate uncertainty.
Your portfolio is built with these realities in mind. Our job is to stay disciplined on your behalf, so you do not have to react to every headline.
How Can We Help You?
If you would like to speak to one of our advisers, please get in touch today.
Contact Hoxton Wealth
We are available to discuss how Hoxton Wealth can help you achieve your financial goals. Together, we can help you build a brighter financial future.
