Oil, War, and Your Wealth: Separating the noise from the reality

It’s been a whirlwind start to the year. We went from a record-breaking "Golden Era" in 2025 to a sudden "Fog of War" in the Middle East that has left many investors feeling like the ground has shifted beneath them.

As we prepare your detailed quarterly reports for April, I wanted to reach out with a brief update to help separate the noise from the long-term reality of your portfolio.

1. The View in the Rearview Mirror: A Year to Remember

Before the current geopolitical tension, we were witnessing one of the strongest market runs in recent history. It’s easy to forget just how well positioned we were:

• The JSE’s Rally: In 2025, South African equities gained a staggering 37% in rand terms, while local bonds delivered a massive 24% return (Daily Maverick).

• A Strong Start to 2026: We entered this year on firm footing. In January alone, the JSE was up 3.8%, extending a two-year rally of roughly 70% (Anchor Capital).

• Gold’s Shine: Driven by earlier uncertainties, gold rose more than 50% last year, providing a significant cushion for many portfolios (Daily Maverick).

2. The Current Storm: What’s Happening Now?

The eruption of conflict between the US/Israel and Iran in late February has undeniably introduced volatility. Here is the "triple threat" we are currently navigating:

• The Oil Spike: With roughly 20% of the world's oil flowing through the Strait of Hormuz, Brent crude has surged past $110 per barrel.

• Inflation & Interest Rates: For South Africa, higher oil prices mean higher fuel and food costs. This may force the South African Reserve Bank (SARB) to pause the interest rate cuts we were all looking forward to (BusinessTech).

• The Rand: The currency has felt the pressure of global uncertainty, with the USD/ZAR exchange rate currently trading around R16.82/$ (Trading Economics).

3. Why Panic is the Only Real Risk (Separating the noise from the reality)

While "loss of performance" in a single month is painful to see on paper, history is a very reassuring teacher.

"The long history of market reactions to geopolitical shocks provides comfort that the impacts on equities, bonds, and currencies have typically been contained and short-lived." — Momentum Investments

Selling now "crystallizes" a loss—it turns a temporary dip into a permanent one. Your portfolio was built to be a "hidden gem" of diversification, specifically designed to withstand these kinds of shocks. The gains we saw in 2025 gave us a significant buffer; what we are seeing now is a market "taking a breath" rather than a total collapse.

The Cost of Missing the Best Days (JSE & S&P 500):

On the JSE: A R100 investment in the All Share Index (1995–2014) grew to R1,760. However, if an investor sat out and missed just the 10 best days in those 20 years, their final value would have been nearly halved to R965(Discovery / I-Net Bridge).

Global Markets: Over the last 30 years, missing the 10 best days of the S&P 500 would have cut your total returns in half. Missing the 30 best days would have reduced your returns by a staggering 83% (Hartford Funds).

"The speed at which markets react to news means stock prices absorb developments instantly. When markets turn, they turn quickly." — Fidelity Investments

Looking Ahead

In April, we will provide a deep dive into how your specific holdings have weathered this period. In the meantime, the best strategy remains the hardest one: Stay the course. The "fog" always clears, and when it does, those who remained invested are the ones who benefit from the recovery.

Disclaimer: This article is for informational purposes only and should not be considered financial advice. For personalised investment advice tailored to your specific financial situation, please contact us or one of our qualified financial advisers at Corona Financial Services.