Global stocks rose for a third consecutive day on Wednesday as diplomatic signals between the United States and Iran offered some relief to rattled markets, but UBS is warning investors against reading too much into short-term moves and urging them to resist the temptation to trade around geopolitical events.
The White House said it has been in productive talks with Tehran over recent days, with Iran signalling some willingness to negotiate, though the US's 15-point ceasefire proposal was initially rejected and fighting in the Middle East continues.
Brent crude oil climbed to $103.5 a barrel during Asian trading on Thursday, while European and US equity futures were lower, and the Trump administration ordered around 2,000 soldiers from the 82nd Airborne Division to the region as it weighs the possibility of land operations.
UBS said investors should be cautious about assuming a swift return to normal energy flows through the Strait of Hormuz, the critical shipping lane through which a significant portion of the world's oil passes, but added that it does not expect lasting economic damage in its central scenario.
The bank's core message is straightforward: trying to move in and out of markets around geopolitical crises tends to destroy rather than protect wealth.
The numbers support the argument. A $100 investment in the S&P 500, the main US stock index, made in September 1989 would have grown to $3,617 by the end of January this year through a simple buy-and-hold approach. Missing just the single best day's performance over that period would have reduced the final pot by around 10%.
The reason missing a handful of days matters so much is that markets' strongest sessions typically occur within weeks of their sharpest falls, meaning investors who sell during downturns often sit in cash exactly when recoveries begin.
UBS also warned of what behavioural economists call "action bias," the impulse to do something during a crisis simply to feel in control, which tends to lead investors to sell at lows and buy back at highs, eroding wealth over time.
The bank recommends staying invested in well-diversified portfolios and suggests gold, high-quality bonds, capital preservation strategies, and hedge funds as tools to cushion volatility without abandoning long-term market exposure.