Why (not) over-reacting to geopolitical shocks matters

When periods of heightened geopolitical turmoil bring volatility to equity markets, the natural temptation for investors is to retreat to the sidelines. Shifting money out of stocks and into cash or “safe haven” assets may seem like the most prudent response, but history indicates it generally isn’t. Trying to time the market can be an expensive mistake for three key reasons: 1. Market disruptions after major geopolitical events have historically been short-lived, and markets have quickly recovered as the headlines fade. 2. Recoveries can come in abrupt bursts, and investors risk returning...