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Two Headlines. One Lesson.
Hoxton Blog • Two Headlines. One Lesson.
This week brought two landmark events, and they pointed in opposite directions. A war that has hung over markets all year was formally brought to an end.
At the same time, a new head of the world's most important central bank chaired his first meeting, signalling that interest rates might still go up rather than down.
One was unambiguously good news. One unsettled markets. Yet for long-term investors, both point to exactly the same conclusion.
A War Ends
After months in which the conflict in Iran was the single biggest worry hanging over global markets, the United States this week signed a formal agreement to end it.
The deal aims to reopen shipping through the Strait of Hormuz and, crucially, ease the pressure on energy prices that have driven inflation higher throughout the year.
It is worth remembering just how significant this is. Back in March, when oil prices spiked and the conflict escalated, the fear was genuine, and the headlines were relentless. Markets fell, uncertainty rose, and many investors wondered whether they should reduce risk until things became clearer.
Only three months later, the war is ending, and stock markets are once again close to record highs. It is a timely reminder that the events which feel permanent rarely are. As energy markets stabilise, one of the biggest drivers of inflation should gradually ease.
That will not happen overnight, but the direction of travel has changed, and markets are already beginning to look ahead rather than behind.
A New Hand on the Wheel
Wednesday also marked another important moment as Kevin Warsh chaired his first meeting as Chairman of the US Federal Reserve, the institution responsible for setting American interest rates. The Fed left rates unchanged, exactly as markets expected, but its message was firmer than many investors had hoped.
Rather than signalling the rate cuts investors were looking for, policymakers indicated that inflation remains a concern and that higher rates could still be needed if price pressures persist. Markets responded by slipping around 1%, a reminder that investors rarely welcome surprises, particularly when new leadership is involved.
History, however, offers a reassuring perspective.
Volatility and Returns Following New Fed Chairs. Source: Exhibit A, FactSet Research Systems Inc., Standard & Poor's. Latest: 17 June 2026. Past performance is not indicative of future results.
Two things stand out immediately. First, six of the seven completed leadership transitions saw the US market finish higher 12 months later, delivering an average gain of around 8%. More often than not, a new Fed Chair has coincided with a perfectly respectable year for investors.
Second, every one of those transitions experienced a meaningful decline along the way, averaging around 17%. Even years that ultimately produced strong returns included uncomfortable periods that tested investors' confidence.
A change in leadership at the Fed may influence short-term sentiment, but history suggests it has rarely changed where markets ended up a year later, and it has never altered the long-term direction of returns.
Two Firsts. One Lesson.
Put the two events side by side and the message is remarkably consistent.
The end of the war shows that even the biggest geopolitical risks eventually fade. The arrival of a new Fed Chair reminds us that markets have successfully navigated changes in monetary leadership many times before. Different events, but the same outcome: uncertainty eventually gives way to normality.
That is why we continue to return to the same principle. The headlines dominating today's news cycle are rarely the ones that determine where your portfolio will be in 10 or 20 years. They matter in the moment, but they are not a reason to abandon a well-constructed long-term investment plan.
The Bigger Picture
This week's events are simply another reminder of a much bigger truth. When headlines tempt investors to move to the sidelines and wait for calmer conditions, history consistently points in a different direction.
The first chart below shows what happened to one dollar invested in the US stock market in 1950, compared with the outcome if you missed just a handful of the market's strongest trading days.
Source: Exhibit A, FactSet Research Systems Inc., Standard & Poor's. Latest: 17 June 2026. Past performance is not indicative of future results.
The difference is remarkable. Stay invested throughout and $1 becomes $445. Miss just the best 50 trading days out of almost 19,000, and that falls to $31. Miss the best 100 days and only $5 remains.
A surprisingly small number of trading days account for a very large proportion of long-term returns. If you are not invested when those days arrive, the outcome changes dramatically.
At this point, a natural question follows. Why not simply avoid the market's worst days instead? On paper, it sounds like the perfect strategy.
Source: Exhibit A, FactSet Research Systems Inc., Standard & Poor's. Latest: 17 June 2026. Past performance is not indicative of future results.
Avoid the worst 50 days, and $1 grows to more than $10,600. Avoid the worst 100 days, and it becomes almost $67,000.
The catch is that markets do not work that way. The best days and the worst days are clustered together, often arriving within days of one another during periods of maximum uncertainty. To avoid the worst days, you would almost certainly miss many of the best ones as well, and the first chart shows exactly what that does to long-term returns.
The second chart is a useful illustration of what perfect market timing could achieve. The first chart is the reality investors face. Time in the market continues to beat trying to time the market, not because timing sounds like a bad idea, but because nobody has demonstrated an ability to do it consistently over the long term.
Our Message This Week
A war has ended. A new Fed Chair has taken the helm. Markets have reacted, just as they always do when uncertainty meets expectations.
The lesson, however, has not changed. Wealth is built over decades, not over news cycles. Short-term events may influence markets for days or weeks, but they have rarely altered the long-term direction of disciplined investing.
Stay invested. Stay diversified. Be there for the best days, because nobody knows when they will arrive. Let time do the work that no single headline, war, or central banker can undo.
Warren Buffett famously described the stock market as "a device for transferring money from the impatient to the patient." It remains one of the simplest and most enduring observations about investing.
If this week's events have prompted questions about your own investment strategy, or you would like to discuss your long-term financial plan, our team would love to help.
You can contact us by email at client.services@hoxtonwealth.com or via WhatsApp on +44 7384 100200.
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