Geopolitical tensions, including the ongoing conflict involving Iran and disruptions to oil markets, have pushed commodity prices higher and increased uncertainty about growth and inflation. These developments have contributed to heightened market volatility, making it difficult for investors to gauge the economic outlook.
However, UBS says periods of market stress are common and history suggests that long-term investors are usually better off staying invested with diversified portfolios.
One key reason is that market declines within a year are typical. Since 1981, the S&P 500 has experienced an average maximum drawdown of around 14% during the year, yet the index has finished negative only a limited number of times over the past several decades.
Volatility spikes have also often been followed by strong returns. According to UBS, when the VIX volatility index rises to elevated levels, the S&P 500 has historically delivered above-average returns over the following 12 months compared with typical market conditions.
The bank also warns that trying to time the market can significantly reduce long-term gains. For example, a hypothetical $100 investment in the S&P 500 made in 1989 would have grown substantially by early 2026 using a buy-and-hold approach. But missing just the market’s best week or best quarter during that period would have significantly reduced the overall return.
source https://www.investing.com/news/economy-news/heres-why-ubs-thinks-market-volatility-is-no-reason-to-exit-equities-4561571
