Stocks have historically been resilient to geopolitical shocks. As the accompanying chart illustrates, even in the face of these more serious and longer-lasting events, the stock market has demonstrated impressive resilience — on average, the S&P 500 draws down 7% and recovers losses within an average of 55 days, or less than two months.

While the latest headlines and commentary from Washington suggest the conflict will be over within the next few weeks, which helped drive stocks higher early last week, disruptions to oil tankers and other shipments through the Strait of Hormuz cannot be ruled out, nor can the risk of further damage to energy facilities or other infrastructure in neighboring Gulf countries. In the event of a ceasefire that opens the Strait of Hormuz, we would expect oil prices to come down. But the price floor is likely higher than February levels in the $50s given what we’ve seen from Iran. On top of that, how long possible peace might last remains an open question.

Bottom line, we believe history suggests that it’s quite possible that the 9% peak-to-trough drawdown in the S&P 500 reached in March may be all we get during this conflict. Market watchers may not have to wait too long for stocks to recover from year-to-date losses. At the same time, geopolitical uncertainty remains high enough to warrant patience and leave us comfortable recommending portfolio risk at or slightly below benchmarks currently, although past performance does not guarantee future results.