Geopolitical volatility — such as wars, trade tensions, political upheaval, or diplomatic conflicts — can shake global markets and lead investors to reevaluate their investments and investment strategies. Recently, tensions in the Middle East have led to fluctuations in asset prices and this can feed through into your True Potential Investments policies.
What’s our Investment Team’s thinking?
Kevin Kidney, True Potential Investments’, Head of Investments comments below:
Israel-Iran attacks have caused market volatility like temporary oil and gold surges. Such volatility often reflects a flight-to-safety response, not a fundamental global economic shift.
While warranting attention, we see these events as primarily regional, and they do not alter True Potential Investments’ cautiously-optimistic outlook on global growth. This measured perspective continues to reinforce our disciplined, long-term investment strategy.”
Should investors act?
For many, the instinct in times of geopolitical tension is to retreat, switch their investments into less volatile assets, and wait until the environment calms. Ultimately, the equity market performance is centred on the medium – to long-term, so here are some reasons why staying invested is often a sensible choice:
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- Asset Markets Have Short Memories
While global events may dominate headlines and fuel short-term volatility, financial markets are remarkably resilient. History shows that most geopolitical events — even major ones — tend to have a fleeting impact on markets. The chart below illustrates the world equity market through time; note that the long-term performance has not been materially impacted by challenging events, and shows that long-term rewards are realised by investing which is focused on underlying business and economic fundamentals rather than geopolitical upheaval and political cycles.
World Equity Market Performance
Source: Bloomberg, 13th June 2025
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- Companies adapt
Companies adapt even during periods of geopolitical instability. Supply chains shift, energy sources diversify, and new opportunities emerge. Over time, strong businesses find ways to thrive — and investors who stay the course can benefit from this long-term growth.
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- Diversification helps during uncertain times
Investing in different sectors, regions, asset classes, and utilising different managers with different investment styles can help cushion the impact of geopolitical shocks in any one area. This is called diversification.
As a recent example, tensions in the Middle East have pushed oil prices up by nearly 15%. This may be seen as a positive for oil producers, but would be viewed differently by companies that are significant consumers of oil and find themselves paying more per barrel than before. While a general example, having exposure to different businesses, geographical locations, and asset classes helps prevent True Potential Investments’ assets from amplifying or strongly correlating with negative trends.
Stay Calm, Stay Invested, Think Long-Term
Geopolitical volatility is unsettling, but it’s not uncommon — and it’s certainly not new. The world has always faced challenges, yet markets have continually climbed higher over the long term.
Investors who remain committed to their long-term plans are more likely to be rewarded. The key is not to predict the next crisis, but to be prepared — and patient — when it arrives.
If you have any questions on your investments, or feel like taking action on your investments, please contact your financial adviser for further information.
If you are a True Potential Wealth Management client looking to contact the Relationship Management Team, you can call them on 0191 500 9164. They are available 7am – 8pm weekdays, and 8am – 12pm Saturdays.
If you are True Potential Investor client looking to contact your dedicated support team, you can call them on 0800 046 8007. They are available 8am – 8pm weekdays.
With investing, your capital is at risk. Investments can fluctuate in value and you may get back less than you invest. This material is not a personal recommendation or financial advice and the investments referred to may not be suitable for all investors. Past performance is not a reliable indicator of future results.
True Potential Wealth Management is authorised and regulated by the Financial Conduct Authority. FRN 529810. Registered in England and Wales as a Limited Liability Partnership No. OC356611.
True Potential Investor is a trading name of True Potential Investments. True Potential Investments LLP is authorised and regulated by the Financial Conduct Authority. FRN 527444. Registered in England and Wales Company No. OC356027
