Uncertainty Weighs on Equities (Again): Lessons from Past Market Cycles

Alfred Lam - 28 avril 2026

Geopolitical conflict, oil prices, and midterm elections may keep investor sentiment cautious—but history shows there’s reason for hope.

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.

Year	Drawdown S&P 500 (ROR)	Duration (days)	Following 1 yr from Bottom
1950	-14%	35	31%
1954	-4%	12	45%
1958	-4%	5	13%
1962	-26%	103	33%
1966	-22%	240	33%
1970	-26%	141	44%
1974	-38%	204	38%
1978	-14%	64	12%
1982	-14%	96	57%
1986	-9%	8	40%
1990	-20%	80	22%
1994	-9%	62	15%
1998	-19%	45	29%
2002	-34%	204	29%
2006	-8%	39	21%
2010	-16%	70	29%
2014	-7%	28	9%
2018	-20%	95	34%
2022	-25%	281	22%
2026	?	?	?
Avg	-17%	95	29%

Source: Bloomberg Finance L.P.

About the Author

Alfred Lam, MBA, CFA

Alfred Lam, Senior Vice President, Co-Head of Multi-Asset, joined CI GAM in 2004. He brings over 23 years of industry experience to his portfolio design, asset allocation, portfolio construction, and risk management responsibilities, which include chairing the multi-asset investment management committee and sizing investment bets to drive added value and manage risk. Alfred holds the CFA designation and an MBA from York University Schulich School of Business. He is a recognized leader in multi-asset investing in Canada. During his tenure, his team has won multiple investment awards, including the Morningstar Best Fund of Funds, and saw assets growing four-fold.

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