Iran, Jobs, and Why Long-Term Investors Often Win

Executive Summary

Two big headlines this week. Here's what they mean.

On Saturday, March 1st, the U.S. and Israel conducted coordinated military strikes on Iranian targets. Supreme Leader Khamenei was killed. Iran responded with missile strikes. Markets fell sharply at the open—and then recovered by the close.

Five days later, on March 6th, the jobs report showed that hiring slowed and unemployment rose slightly. Two worries at once is real. But here's what matters: both are happening within a fundamentally healthy economy.

Economic growth remains steady. Consumer finances are strong—people have paid down debt, built up savings, and credit is in good shape. The cooling job market can give the Federal Reserve room to consider cutting interest rates this summer, which could be beneficial for borrowers and potentially for stock performance. This does not appear to be a financial crisis or recession.

What we're saying: This is exactly why we built your portfolio with bonds, cash, and options strategies to help manage periods of uncertainty. Historical evidence suggests that staying calm and staying invested can often be the right call.

Historical Context: Why Geopolitical Shocks Are Commonplace

Over the past 80+ years, the S&P 500 Index—a market-capitalization-weighted index of 500 of the largest U.S. publicly traded companies—has finished higher roughly 65% of the time in the 12 months following major geopolitical shocks¹. Some historical examples:

• Cuban Missile Crisis (1962): +27.8% in the following year
• Iraq War (2003): +26.7% in the following year
• Iran Strikes (June 2025): S&P 500 up 5.7% approximately one month later; ceasefire within days

The pattern suggests: staying invested through these events can often have been a beneficial approach historically. Investors who sold at the open on Saturday morning captured losses. Those who remained invested captured gains by day's end.

Two Charts Worth Looking At

Chart 1: U.S. Stock Market Performance Through Major Conflicts (1926–2025)

Based on historical data through December 2025, major geopolitical shocks from Pearl Harbor through the end of 2025 are documented and tracked. The pattern shows these events generally appear as temporary declines or pauses within an otherwise upward trajectory of the S&P 500 Index. The message is clear: geopolitical events generally do not permanently derail the long-term story of stock market performance.

Source: Avantis Investors Monthly ETF Field Guide (January 2026), data from Ken French Data Library, July 1926 – December 2025. Past performance is no guarantee of future results.

Chart 2: Mean and Median Returns After Geopolitical Conflicts

When geopolitical shocks occur, investors naturally ask: "When do I get my money back?" The data shows returns across 3-month, 1-year, and 3-year periods following major geopolitical events: Yes, the first three months can be volatile. But by year one, the median return has often been positive. By year three, consistent gains have been observed across the historical record.

Source: Avantis Investors Monthly ETF Field Guide (January 2026), data from Ken French Data Library, July 1926 – December 2025. Returns greater than one year are annualized. Past performance is no guarantee of future results.

Your Portfolio's Built-In Shock Absorbers

You didn't wake up on March 1st unprepared. Here's how your portfolio can help manage volatility:

Bonds

Can help stabilize your portfolio during volatility². When equity markets experience sharp declines, investment-grade bonds may gain value from "flight-to-quality" flows. Long-duration Treasuries helped cushion losses on March 1st.

Cash

Provides optionality. Major events often create mispricings. Cash can provide opportunity for you to deploy capital into potentially oversold assets when genuine dislocations occur.

Put Options

Can provide reassurance through downside protection. You pay a premium in normal years to help you sleep better during crisis years. During the March 1st morning sell-off, puts helped cushion losses.

Covered Calls

Can generate income during periods of elevated volatility. When call option premiums rise (like March 1st), this strategy can allow you to be compensated while maintaining your positions. This approach can likely generate cash when markets are uncertain.

Diversification & Minimum Volatility*

Serves as your structural foundation. Your portfolio is designed to avoid being over-leveraged or concentrated into crisis-sensitive positions. March 1st created headline volatility but did not destabilize the overall structure.

Economic Data: Why Weak Jobs May Make Sense in Context

The jobs report that came out on March 6th was softer than expected. Companies hired fewer people, and unemployment rose slightly. Here's the broader economic context:

Economic growth continues. Recession probabilities remain relatively low based on current indicators³.

Source: DoubleLine, BEA, U.S. Treasury, BLS, CBO, DOL, Fed, ISM, TCB, S&P Global, USCB, NFIB, New York Fed, OECD as of February 2026

Consumer finances remain strong. Households have paid down debt, built up savings, and have better financial flexibility than in prior years. Credit quality is holding—most people continue to pay mortgages and loans on time.

Wages continue growing after accounting for inflation. This suggests people may have increased spending power.

Hiring is slowing, which may be normal after years of very tight labor market conditions. A cooling job market can provide the Federal Reserve more flexibility to consider lowering interest rates this summer—which could benefit borrowers and potentially support stock valuations.

Takeaway: The job numbers suggest the economy may be normalizing rather than entering crisis, which can create room for the Federal Reserve to provide relief through potential rate cuts.

One Significant Risk: Oil Supply

While the military strikes themselves appear to involve manageable disruption risk for equity markets, a meaningful portfolio risk would be whether the Strait of Hormuz closes, disrupting approximately 20% of global oil supply.

Current assessment: The Strait is now effectively closed, and the price of oil has moved higher as a result. Per UBS, the IEA announced it would work to release oil from strategic petroleum reserves to help lower the effects.

Even in a severe scenario where oil reaches $100 per barrel, Wells Fargo research models approximately a 1 percentage point bump to headline inflation⁴—with effects fading meaningfully by mid-2026. The Federal Reserve would likely be reluctant to overtighten in response to a temporary, geopolitically-driven energy spike.

What we're monitoring:

• Tanker traffic through the Strait
• Oil futures term structure
• Iranian Revolutionary Guard rhetoric
• Israeli military posture

What We're Doing

Monitoring signals in parallel. We're tracking oil prices, Strait of Hormuz shipping, and diplomatic signals. We're also monitoring Federal Reserve rhetoric for clarity on rate-cut timing expectations for summer.

Holding the structure. Your portfolio's bonds, cash, puts, and covered calls are working as designed. We are not dismantling this structure in response to a one-day shock or a single weaker jobs report.

Looking for opportunities. If genuine dislocations emerge (equities significantly oversold, bond yields moving irrationally), we have cash and optionality available to deploy.

Communicating clearly. We focus on facts—market data, shipping traffic, economic data—rather than speculation.

The Bottom Line

In six months, this week may feel like a footnote in investment history. What matters now is how you respond. Historical evidence shows that staying invested through these moments can often have been the better choice.

Markets don't like uncertainty, and neither do people. But your portfolio was explicitly designed to tolerate uncertainty—with bonds for stability, cash for optionality, puts for reassurance, and diversification* for sustainable risk-adjusted returns.

Staying invested can often have been the winning approach historically. The evidence points in that direction.

We're tracking this situation actively. Material developments will be communicated as they occur.

Footnotes & Sources

• ¹ Avantis Investors Monthly ETF Field Guide (January 2026), analysis based on Ken French Data Library (data as of December 31, 2025). Returns represent S&P 500 Index performance.
• ² Historical bond behavior during equity market declines; based on bond market theory and historical patterns. See Wells Fargo Fixed Income research.
• ³ Recession indicators include multiple economic data sources and proprietary modeling. Current indicators as of March 2026.
• ⁴ Wells Fargo Wealth & Investment Management Research. Blue Matrix Link: https://wellsfargo.bluematrix.com/links2/html/fc3adef5-1705-4a24-a972-727e32cf2d18

Important Disclosures

*While diversification can help reduce market risk, it does not eliminate it. Diversification does not assure a profit or protect against loss in a declining market.

Index Benchmarks presented within this report may not reflect factors relevant for your portfolio or your unique risks, goals or investment objectives.

Past performance of an index is not an indication or guarantee of future results. It is not possible to invest directly in an index.

The S&P 500® Index, or the Standard & Poor's 500® Index, is a market-capitalization-weighted index of the 500 largest U.S. publicly traded companies.

This communication may include forward-looking statements. Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as "may," "will," "expects," "believes," "anticipates," "plans," "estimates," "projects," "targets," "forecasts," "seeks," "could" or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.