Why This Geopolitical and Energy Crisis Feels Worse than Ever!

Uncertainty, Hindsight Bias, and Why Feeling Worse Doesn’t Mean It Is!

Nearly every market cycle has a defining emotional moment—when investors say, “This feels different.” More dangerous. More uncertain. More threatening to long‑term plans than anything they can remember. That’s the sentiment I’m hearing again today. Between geopolitical conflict, energy shocks, persistent inflation, and relentless headlines, it’s easy to believe this moment represents one of the greatest threats to portfolios we’ve ever faced. The discomfort feels sharper because we don’t yet know how—or when—resolution will arrive.

Here’s the critical distinction:

It isn’t the worst—but it feels like it.

Every crisis feels more severe while we’re living through it because uncertainty is painful. Past crises now sit safely in the rearview mirror. We know how they ended. We know markets recovered. Once outcomes are known, fear fades. This is hindsight bias at work—the tendency to forget how uncertain and uncomfortable past crises felt at the time. The difference isn’t severity. It’s resolution. When we forget how unclear the past actually was, we risk misjudging the present.

Preparedness, Not Prediction

Successful investing has never depended on prediction. If it did, long‑term success would be rare. The future offers no facts—only probabilities. That’s why durable plans are built around preparedness, not foresight. Preparedness has two components: emotional and financial. Emotional preparedness begins with understanding the true nature of markets. Volatility and drawdowns (temporary declines) are not flaws—they are the price of long‑term growth. These moments test conviction, but they do not invalidate sound plans. Financial preparedness is what makes emotional discipline possible. At Fusion, portfolios are designed to reduce the likelihood that investors are forced to act during moments of stress. One of the most important ways we do this—particularly as clients approach or enter retirement—is by building a dedicated spending buffer. We typically reserve two to three years of expected spending needs in short‑term bonds or money markets. This capital is not intended for growth. Its purpose is certainty, so long‑term assets don’t need to be sold during temporary declines. This structure allows our investors to maintain the majority of their portfolio exposure in the safest asset class, equities — the one that historically has been among the most successful at defeating money's greatest threat, inflation! This allows equities to do what they are meant to do: compound. Emotional discipline works best when supported by financial design.

Why Stocks—Not Stability—Protect Purchasing Power

When investors say they want “safety,” they usually mean stability—fewer fluctuations and smoother account statements. But stability of account value is not the same thing as safety of purchasing power. Inflation compounds relentlessly. Assets that appear stable (cash and most bonds) freeze both income and principal, leaving them vulnerable to erosion over time. Stocks are different. Equities represent ownership in real businesses that raise prices, grow earnings, and increase dividends. While the path is never smooth, stocks have historically been among the most effective ways to outpace inflation and preserve purchasing power — to protect and grow wealth. Historically, all market declines have been temporary while loss of purchasing power is permanent.

Two Final Truths Worth Remembering

FIRST: the urge to fight short‑term volatility is normal—but acting on it undermines success. Discomfort during market declines is human. The urge to smooth returns, hedge risk, or retreat into perceived safety is entirely natural. But history is clear: acting on that urge by altering portfolios interferes with long‑term results and often dramatically reduces the probability of meeting financial goals.

To illustrate the fleeting nature of volatility over the long-term, let's examine the concept of rolling returns. Instead of measuring returns by calendar years, rolling periods evaluate every possible holding period. This captures the experience of investors who enter the market at many different starting points.

Rolling one‑, three‑, five‑, and ten‑year stock returns reveal a simple truth: volatility shrinks rapidly as time extends. What looks chaotic in a single year narrows materially over longer holding periods. Time—not intervention—is the cure for volatility. What does not fade with time is equity's premium return. For more than a century, stocks have delivered roughly 10%+ annual returns (average annualized), far exceeding the 6% annual returns of bonds. Attempts to suppress short‑term volatility—through excessive bond exposure, alternatives, or hedging strategies—may feel prudent, but they typically reduce long‑term returns and dilute compounding. The healing power of time does the work naturally; artificial interference weakens it.

*Source: Nick Murray Interactive - February 2026

SECOND: stocks have already overcome every challenge investors fear today, and protected purchasing power in the process. Across many decades marked by wars, energy shocks, inflation spikes, political upheaval, recessions, financial crises, pandemics, republicans, democrats and repeated market declines—including multiple periods when stocks were cut in half—equities did more than recover. They compounded AND dividends rose even faster. Historically, dividend growth has exceeded inflation by a wide margin, providing not just income, but income that kept pace with—and outpaced (almost two-fold)—the rising cost of living. The lesson endures: Short‑term volatility is temporary. Inflation is permanent. Time heals the former. Equities defeat the latter.

The average American couple retires at age 62. They were born in 1964. Since the end of 1964, it now takes about $10 to buy what $1 once did. Over that same lifetime, dividends grew roughly three times faster than the rise in living cost, providing meaningful real cash flow to spend (3 times more than inflation requires), while stock values rose about eightfold beyond inflation—leaving investors not just keeping up, but able to support a far higher standard of living for themselves and their family.

*Source: Political Calculations – The S & P 500 at your Finger Tips

The Fusion Philosophy

We don’t try to predict markets. We build durable plans designed to function through uncertainty, volatility, and discomfort—because those conditions are not exceptions. They are the typical environment. As one respected industry veteran put it:

“We do not engage in market timing, stock picking or tactical asset allocation on any level, and we do not react to market movements or economic news.”

That philosophy captures our approach—not because markets are predictable, but because they aren’t.