Staying Patient in an Impatient Market

As I sit here drafting this memo early the morning of March 23, the conflict with Iran has entered its third, and what could be its most critical, week.

In our original memo from the weekend the conflict started, we laid out three possible scenarios: De-escalation, continued hostilities, and regional spillover. It appears now we are somewhere between continued hostilities and regional spillover as Iran has continued to fire missiles and drones at Israel and Gulf countries hosting U.S. assets. Kuwait and the United Arab Emirates said Monday that their air defenses have intercepted more hostile missile and drone attacks from Iran. Additionally, Saudi Arabia’s defense ministry said it had detected two ballistic missiles fired toward the Riyadh area. One was intercepted, and the other fell into an uninhabited area. While there has been spillover with Iran firing missiles and drones at their Middle East neighbors, the conflict has not yet seen any nations publicly supporting Iran.

As noted above, we enter a critical time in the conflict. On Saturday, President Trump issued an ultimatum to Iran to either reopen the Strait of Hormuz or face strikes on its power plants. Iran immediately responded by saying that any U.S. or Israeli strike on Iran’s power plants would “immediately” trigger retaliatory attacks on energy and oil infrastructure across the region, causing “irreversible” damage. They have additionally added that any U.S.-linked financial institutions holding American government bonds would be targeted alongside military bases.

Literally as I’m writing this, President Trump shifted his tone, stating there were “very strong talks” underway toward a resolution and announcing he would postpone any strikes on Iran’s power plants until at least Friday to allow time for negotiations. Markets responded immediately, with the S&P 500 rising 1.7% on the news.[i] Iran, however, denied Trump’s remarks, alleging the claims were made simply to calm markets. As has become common during this administration, this is a rapidly evolving and unpredictable situation.

While there appears to be credible information that U.S. and Israeli strikes have severely damaged much of Iran’s capabilities, they have also made Iran a desperate nation. “Winning” this conflict looks very different for Iran than it does for the rest of the world.  Tehran would rather fight a protracted, drawn-out war with the U.S. than face repeated conflicts with Israel, according to Nate Swanson, director of the Iran Strategy Project at the Atlantic Council. “They don’t need to fight a symmetrical war. They just need to survive,” Swanson said. “Survival is winning for Iran. They just need to hit one tanker every so often going through the Strait — they effectively have the bottleneck, even if it’s not fully mined.”

Over the past year, markets have been resilient in the face of a lot of chaos. Much of this has been based on the “TACO trade,” referring to Trump’s history of walking back threats to de-escalate a situation. Monday’s announcement fits that pattern, though Iran’s denial is a reminder that the situation is volatile.  A prolonged conflict will put more strain on the global economy and the markets as oil prices and uncertainty rise. However, I think it is important to keep perspective:

• Markets are coming off 3 years of really good returns.
• The S&P is only 7% off its all-time highs.
• 10% pull backs happen roughly 6 out of 10 years.
• 20% pullbacks happen every 3 years, and we have not had one since 2022 (2025 we briefly touched 20% but recovered half of that loss the next day).

As we have stated before, market turmoil can provide opportunities. Tom Lee, CIO of Fundstrat, recently reiterated his 7,700-year end price target on the S&P 500, saying  “markets bottom early in conflicts as fear gets priced in quickly and positioning is already de-risked before clarity arrives.” This would represent a roughly 18% gain for the S&P 500 from here. It should be noted that Tom has long been one of the most bullish analysts on the markets. While he may be overly optimistic, I think his point on fear getting priced in early speaks a lot of truth.

While this conflict could cause us to make minor portfolio adjustments to better position for the current situation, our overall philosophy will not change. Cash that does not need to meet spending obligations over the next few years should be invested in an allocation that aligns with your goals and risk tolerance. Short-term fluctuations can be scary, but they remind me of what legendary investor Warren Buffett often says: “The stock market is a device for transferring money from the impatient to the patient.”

Will

Disclosure: The opinions in the preceding commentary are as of the date of publication and are subject to change. Information has been obtained from third-party sources we consider reliable, but we do not guarantee the facts cited are accurate or complete. This material is not intended to be relied upon as a forecast or investment advice regarding a particular investment or the markets in general, nor is it intended to predict or depict the performance of any investment. Investors should consult their financial advisor on the strategy best for them. Past performance is no guarantee of future results.

[i] https://www.cnbc.com/2026/03/22/stock-market-today-live-updates.html