Insights & Resources

By Alfred Lam, CFA, Senior Vice-President, and Co-Head of Multi Asset, CI Global Asset Management

Lessons from Past Market Cycles

Without a doubt, the ongoing conflict involving Israel, the United States, and Iran has become a major driver of
market sentiment, prompting investors to grow increasingly cautious toward non-cash assets. Although the
conflict appears likely to remain regional, its impact on oil markets has been both global and significant. Crude
prices surged 57% in March, largely due to the closure of the Strait of Hormuz, through which roughly 20% of
global oil supply flows. This sharp increase has pushed inflation expectations higher and is influencing both
monetary policy outlooks and broader economic conditions.

While some may argue that equity markets have oversold following a 4% decline in March (as measured by the
MSCI World Index), we believe sentiment will remain constrained by the conflict. Until the Strait of Hormuz
reopens—a key condition for restoring investor confidence—markets are likely to drift lower, irrespective of
fair-value considerations. Compounding this backdrop, 2026 is also a U.S. midterm election year, a period that has historically brought elevated volatility. This is evident in the table below, which tracks market performance during all midterm cycles since 1950. Importantly, returns in the 12 months following a market bottom are typically very strong. Even more interesting, an investor who bought at the peak of a midterm year (rather than the bottom) still experienced positive 12-month returns in 16 out of 19 instances since 1950.

Although the current geopolitical and policy environment makes near-term outcomes difficult to predict, history suggests that once uncertainty clears, the ensuing recovery can be significant. As a result, staying invested may be the best advice.

We sincerely hope this conflict ends soon and wish you and your families safety and peace.