And it’s not just because of the technology. So much has changed, from domestic fiscal policy to geopolitical risk and every shift affects how you build your portfolio.
We’ve already seen the impact of the Iran War on the prices of gas, fertilizer, and food items. Yet, this is only one conflict in one region. As a fiduciary, I often review as many variables as possible when presenting portfolio options to clients. The ongoing market volatility makes this even more important.
From threats against dollar sovereignty to rising trade tensions and armed-conflict, there are risks to nearly every asset group. While I can’t cover every single variable here, I find it often helps my clients to place their portfolio in the context of the wider economy.
As of writing in 2026, we are looking at a diverse set of short-term and long-term risks.
The financial markets are like the climate. Both are closed systems, and what affects one area can touch another across the globe. Nowhere is this more true than with international markets, including emerging markets, commodities, and other investment types.
According to the World Economic Forum’s Global Risk Report 2026, geopolitical and geoeconomic risks are front and center. And it’s easy to see why.
The war with Iran accounts for only one conflict influencing the global markets. BlackRock’s Global Indicator lists its top 10 threats, at the time of writing:
These are only some of the multiple international issues plaguing the U.S. Increased extreme weather events linked to the encroaching Sahara Desert in North Africa or the faltering of the Atlantic Ocean currents, the resurgence of Ebola in Uganda, the migration of screwworm from Central American to the U.S., ongoing war in Sudan and Gaza, all increase risk for intentional and domestic assets.
The same WEF report suggests that these issues may only increase by 2028.
Geoeconomic confrontation remains a significant concern for every single stakeholder group from civil society to international organizations, academic, governments, and private sectors.
However, the 10-year forecast shifts from geopolitics to extreme weather events and ecosystem collapse as the top concern.
That said, these events are often interlinked and fluid. Armed conflict and violent unrest often leads to increased use of munitions and toxins and delays sustainable infrastructure projects, leading to a rapid degradation of the environment.
Investors face a complicated choice regarding their portfolio. How can you preserve and grow wealth with a diverse cascade of problems? Furthermore, investors passionate about value-based investing must also balance growth with avoiding assets that fund tomorrow’s risks.
Diversification is the golden rule of investing. Every article on asset allocation and portfolio resilience deals in diversification. The questions advisors typically ask investors is how much?
The lower your risk tolerance, the more diverse your portfolio. In a regular, peacetime economy, this simply lowers your risk and potential rewards.
But what happens when conflict compounds and increases the overall risk of multiple assets? Furthermore, harmful practices can also be profitable, which asks some investors to sacrifice values for a comfortable retirement.
It’s not easy. And each investor is different.
In the broad view, diversification is still useful. Diversified commodities, in conjunction with bonds and stocks, is a common route. Because commodities tend to follow an opposite trajectory than stocks and bonds, they could be used to hedge risk during periods of scarcity. This is because scarcity can boost commodity prices while the same situation dampers bond and stock performance.
But the risk here is that geopolitical events are unpredictable and often hit commodity prices more than other events. These are not “safer” investments—simply different.
Of course, commodities aren’t the only way to diversify your portfolio. There are alternative investments that offer similar risks but fit the bill for asset diversification. Real estate is one example. The income can be significant, especially for a retiree. Yet, these assets also face risk exposure. Threats of inflation from supply chain disruptions—common during COVID and during tariff implementation—can dig into rental income.
And while you pour investments into more buckets in hopes to safeguard your overall portfolio, opportunities for growth also decrease. Diversification cannot completely guarantee protection from loss.
So, what’s an investor to do?
I’ve been in the financial services industry for decades. This is the most unstable and unpredictable economy I’ve ever seen. And it warrants more caution over risk.
Could you “win big” with all this volatility? Maybe. But the losses will always be higher.
Diversification across assets and geographies matter. But that’s step one.
Access to quality, institutional investments with lower management costs provide some offset to risk. So does identifying assets that may be insulated from current geopolitical conflicts. Targeting non-cyclical sectors for domestic investments may also offer some safeguards.
Investment in defense stocks and funds are often the greatest point of contention for ESG and value-based investors. These assets offer high growth in uncertain times. But they can also fund the geopolitical conflicts creating market volatility. In the case of people who want to avoid these stocks, it helps to review alternatives to high-growth assets with the understanding the risks will remain high.
When the economy is unpredictable and age-old advice no longer rings true, it can be beneficial to consider how much risk feels manageable. Then you can re-structure your portfolio to balance growth with preservation.
If you’d like a second opinion, I’d love to speak with you in a non-commitment call about your goals and concerns.
You can book a complimentary session
or call me at +1 (828) 884-8840.
