You might expect a year that included both a massive tariff shock and a Middle Eastern war to leave investors nursing serious losses. You'd be half right.

According to reporting by the New York Times, most stock investors have indeed lost money since the Iran conflict began. But zoom out just slightly—to the twelve months since the "Liberation Day" tariff announcement in April 2025—and the picture flips entirely. Returns have been what the Times describes as "splendid" over that full period, despite the recent war-driven selloff.

The contrast offers a masterclass in how markets digest different flavors of chaos. It also raises uncomfortable questions about what investors are actually pricing in when geopolitical tensions flare.

The Tale of Two Crises

Liberation Day, if you've managed to block it from memory, was the Trump administration's April 2025 announcement of sweeping new tariffs on imports from dozens of countries. Markets initially tanked on the news—the uncertainty around supply chains, inflation, and potential retaliation sent the S&P 500 down nearly 8% in the following two weeks.

But then something curious happened. Investors adapted. Companies announced workarounds. Some tariffs were negotiated down. The apocalypse everyone feared turned into merely a headache. And markets not only recovered but surged, pricing in a world where higher trade barriers were simply the new cost of doing business.

Fast forward to early 2026, and the Iran war introduces a different kind of uncertainty—one involving oil supplies, potential escalation, and the specter of broader regional conflict. This time, the selloff has stuck. Energy prices have spiked, defensive sectors have outperformed, and risk assets have taken a beating.

Yet for anyone who bought stocks in April 2025 and held on, the ledger still shows green.

What Markets Fear (and Don't)

The divergence tells you something important about how professional investors think. Trade policy, however disruptive, is ultimately a known unknown. You can model it, hedge it, lobby against it. Wars—especially ones involving major oil producers in volatile regions—are different beasts entirely.

"Markets hate uncertainty, but they hate unquantifiable uncertainty even more," one portfolio manager told the Times. Tariffs are annoying. Geopolitical conflicts that could spiral are terrifying.

There's also the matter of corporate adaptability. A year ago, CFOs were already gaming out tariff scenarios, reshoring production, and renegotiating contracts. They had levers to pull. What's the corporate playbook for "Iran closes the Strait of Hormuz"? There isn't one, really. You just hold your breath and hope.

The Retail Investor's Dilemma

For individual investors, this year presents a psychological puzzle. If you panic-sold during the Liberation Day chaos, you missed the subsequent rally. If you held through that only to bail during the war selloff, you've now locked in losses after months of gains.

The temptation to time these events is enormous. The track record of successfully doing so is abysmal.

What's particularly cruel is that both decisions—selling during the tariff panic and selling during the war—would have felt rational in the moment. Tariffs threatened corporate margins and consumer spending. War threatens energy supplies and global stability. Both are legitimate concerns. Both triggered real market declines.

And yet, over the full period, staying invested has been the winning move. That's the kind of outcome that makes financial advisors say "time in the market beats timing the market" until they're blue in the face, and makes everyone else want to throw something.

What Happens Next

The uncomfortable truth is that nobody knows whether the recent war-driven losses will prove temporary like the tariff shock, or whether they're the beginning of something worse.

Oil prices remain elevated but haven't hit crisis levels. Corporate earnings, due out over the next few weeks, will offer clues about whether companies can maintain margins in this environment. And the war itself remains fluid—any escalation or de-escalation could swing markets dramatically.

What seems clear is that 2025-2026 has stress-tested the "buy and hold" philosophy in ways that few recent periods have. Investors have faced a policy shock that upended decades of trade assumptions and a military conflict that threatens critical global infrastructure.

The fact that long-term holders are still ahead says something about market resilience. Whether it says something about market rationality is a different question entirely.

For now, the lesson appears to be this: Markets can absorb a shocking amount of chaos, as long as they believe the chaos is manageable. The moment that belief cracks—well, that's when things get interesting.

And if you're checking your portfolio balance daily during all this? You're probably not having a splendid time, regardless of what the twelve-month returns say.