Things are heating up on the geopolitical stage.

India’s Prime Minister Narendra Modi traveled to Israel this week as tensions rise between the U.S. and Iran over nuclear materials controls.

Meanwhile, Secretary of State Marco Rubio postponed his own trip to Israel until Monday.

On the surface, these events may appear unrelated. But timing in geopolitics is rarely accidental.

Rubio’s travel delay raises questions about whether something significant could occur before he arrives.

If negotiations between Washington and Tehran stall, military action could follow as early as this evening after Modi departs Israel.

I’m not typically one to read tea leaves, but it’s clear that the situation could escalate quickly.

So I want to make sure you’re prepared for how the markets could react as soon as bombs start to fall.

What History Says Could Happen Next

If a strike were to occur, it would be a major geopolitical development.

Oil prices would spike in the immediate aftermath. Volatility will surge as traders rush to price in uncertainty. Futures markets could open sharply lower.

Investors would immediately assume supply disruptions, rising energy costs, and broader instability are imminent.

This reaction is understandable. Markets dislike uncertainty, and war is the ultimate uncertainty.

But if history is any guide, the stock market's reaction would likely be more muted than you might expect.

Consider Russia’s invasion of Ukraine in 2022.

In the days leading up to the invasion, investors feared a prolonged European war that would destabilize global markets.

Stocks did fall sharply at first. Oil surged. Volatility jumped. But within weeks, markets began to stabilize.

Within months, however, many major indexes had recovered a significant portion of their losses.

Or consider the U.S. bombing of Iranian-linked targets in mid-2025. Commentators warned of broader regional conflict.

But after an initial burst of volatility, markets resumed trading based on fundamentals like earnings, inflation, and Federal Reserve policy.

The conflict became another headline absorbed into the market’s vast information stream.

This pattern is not new.

Since World War II, markets have experienced dozens of military conflicts, terrorist attacks, and geopolitical crises. In most cases, the initial shock fades quickly.

Investors quickly refocus on corporate profits, economic growth, and monetary policy.

The reason is simple: markets care about cash flows.

Unless a conflict fundamentally disrupts global trade or triggers a systemic financial crisis, its long-term impact on equities is often limited.

Then There’s the Oil Question

Oil is another area where assumptions often outpace reality.

The common narrative is that conflict in the Middle East automatically leads to sustained higher oil prices.

Sometimes that’s true in the short term. But oil markets are complex and deeply interconnected.

Even countries in conflict often continue to sell oil because their economies depend on it.

Sanctions frequently contain loopholes or carve-outs, and suppliers can sometimes find ways to reach buyers through indirect channels.

Quite simply, the U.S., Europe, China, and India all want to buy oil at lower prices. And Russia and India need to sell their oil to sustain their economies.

The Russia-Ukraine war is a clear example.

Despite sanctions and hostilities, Russian oil continued flowing to global markets, often at discounted prices.

Similarly, tensions involving Venezuela over the years have not completely halted production or exports.

Global energy markets adapt.

Prices may spike initially, but they often settle once traders assess actual supply disruptions rather than worst-case scenarios.

If strikes were to occur against Iran, markets would quickly assess whether oil infrastructure was directly targeted, if shipping lanes were disrupted, or if major producers adjusted output.

Absent a sustained supply shock, oil’s move could prove temporary.

Short Term vs. Long Term Outlook

That does not mean there is no short-term opportunity.

Highly active and experienced traders sometimes look to instruments like short-dated VIX call options to hedge or speculate during sudden spikes in volatility.

If a strike were announced, implied volatility could jump rapidly, rewarding those positioned for it.

But these trades are complex. They require precise timing and a deep understanding of options pricing.

For most investors, trying to trade around geopolitical headlines is more likely to cause stress than generate profits.

The key question for long-term investors is not whether volatility will rise for a few days.

It’s whether the event changes the long-term trajectory of corporate earnings and economic growth. In most historical cases, the answer has been no.

When dramatic headlines break, the instinct is to act first and think later.

Sell before it gets worse. Buy oil stocks immediately. Load up on defense contractors. Get volatility protection at any price.

But the data suggests that the best course of action in most geopolitical crises is to do nothing.

That doesn’t mean being indifferent to global events.

It means recognizing that markets are forward-looking and resilient. They process new information rapidly.

By the time you can even react, much of the move may already be priced in.

The Lesson Is Clear

I don’t want to diminish the seriousness of the situation. Armed conflict carries profound consequences for those directly affected.

But from a portfolio management perspective, the lesson is consistent.

History teaches us that the stock market is remarkably indifferent to armed conflict unless it fundamentally alters the global economic system.

Most conflicts do not.

If strikes occur within the next few days, we will likely see a burst of volatility.

But within weeks or even a few days, attention would shift back to the same things that are driving the market right now.

In moments like these, discipline is more valuable than prediction.

Stay diversified. Avoid emotional decisions. Remember that short-term noise rarely changes long-term outcomes.

And above all, recognize that while geopolitics can move markets in the short run, earnings, innovation, and economic growth still drive wealth creation over time.

Sometimes, the smartest move is to tune out the noise and stay the course.