When global headlines turn alarming, investors often feel an urge to overhaul their portfolios, but that instinct is usually the wrong one. Markets tend to recover far faster than our emotions do, even during periods of geopolitical tension. That anxiety is showing up in real time: A retired friend emailed me this week asking how to protect his portfolio beyond the usual mix of precious metals, Treasuries, dividend stocks, oil stocks and domestic or international real estate.

To be sure, much concerns investors. Geopolitical tension with Iran influences oil supply expectations, energy price volatility — with the price of gasoline up 9% in the last week — defense and cybersecurity spending, insurance and shipping costs in the region, and overall global risk sentiment.

Yet the evidence suggests dumping all your stocks is not the optimal response to the fears people are feeling. That’s because in more than 25 wars and military conflicts over the last 70 years, the S&P 500 has on average bottomed out between 4.7% and 5% after roughly 19 days — and recovered fully within about 42 days, according to LPL Financial Research.

What’s more, 70% of the time, the S&P 500 has been higher one year after the start of armed conflict and has delivered an average return exceeding 11% in the year following major geopolitical shocks, noted Hartford Funds.

The top performing investors during geopolitical turbulence have already built diversified, hedged portfolios with adequate liquidity — which strengthens their ability to resist the cognitive biases that induce ill-timed panic selling.

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Why the Duration Of Middle East Tensions Matters More Than Any Single Flashpoint

The economic pain from the conflict in Iran depends on how long it lasts. Rather than focusing on whether the Strait of Hormuz is formally closed,........

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