April 28, 2026
Uncertainty Weighs on Equities (Again): Lessons from Past Market Cycles
Without a doubt, the ongoing conflict involving Israel, the United States and Iran has become a major driver of market sentiment, prompting investors to grow increasingly cautious toward non‑cash assets. Although the conflict appears likely to remain regional, its impact on oil markets has been both global and significant. Crude prices surged 57% in March, largely due to the closure of the Strait of Hormuz, through which roughly 20% of global oil supply flows. This sharp increase has pushed inflation expectations higher and is influencing both monetary policy outlooks and broader economic conditions.
While some may argue that equity markets have oversold following a 4% decline in March (as measured by the MSCI World Index), we believe sentiment will remain constrained by the conflict. Until the Strait of Hormuz reopens—a key condition for restoring investor confidence—markets are likely to drift lower, irrespective of fair‑value considerations.
Compounding this backdrop, 2026 is also a U.S. midterm election year, a period that has historically brought elevated volatility. This is evident in the table below, which tracks market performance during all midterm cycles since 1950. Importantly, returns in the 12 months following a market bottom are typically very strong. Even more interesting, an investor who bought at the peak of a midterm year (rather than the bottom) still experienced positive 12‑month returns in 16 out of 19 instances since 1950.
Although the current geopolitical and policy environment makes near‑term outcomes difficult to predict, history suggests that once uncertainty clears, the ensuing recovery can be significant. As a result, staying invested may be the best advice.
| Year | Drawdown S&P 500 (ROR) | Duration (days) | Following 1 yr from Bottom |
|---|---|---|---|
| 1950 | -14% | 35 | 31% |
| 1954 | -4% | 12 | 45% |
| 1958 | -4% | 5 | 13% |
| 1962 | -26% | 103 | 33% |
| 1966 | -22% | 240 | 33% |
| 1970 | -26% | 141 | 44% |
| 1974 | -38% | 204 | 38% |
| 1978 | -14% | 64 | 12% |
| 1982 | -14% | 96 | 57% |
| 1986 | -9% | 8 | 40% |
| 1990 | -20% | 80 | 22% |
| 1994 | -9% | 62 | 15% |
| 1998 | -19% | 45 | 29% |
| 2002 | -34% | 204 | 29% |
| 2006 | -8% | 39 | 21% |
| 2010 | -16% | 70 | 29% |
| 2014 | -7% | 28 | 9% |
| 2018 | -20% | 95 | 34% |
| 2022 | -25% | 281 | 22% |
| 2026 | ? | ? | ? |
| Avg | -17% | 95 | 29% |
Source: Bloomberg Finance L.P.
About the Author
Alfred Lam, Senior Vice President, Co-Head of Multi-Asset, joined CI GAM in 2004. He brings over 23 years of industry experience to his portfolio design, asset allocation, portfolio construction, and risk management responsibilities, which include chairing the multi-asset investment management committee and sizing investment bets to drive added value and manage risk. Alfred holds the CFA designation and an MBA from York University Schulich School of Business.
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Certain statements in this document are forward-looking. Forward-looking statements (“FLS”) are statements that are predictive in nature, depend upon or refer to future events or conditions, or that include words such as “may,” “will,” “should,” “could,” “expect,” “anticipate,” “intend,” “plan,” “believe,” or “estimate,” or other similar expressions. Statements that look forward in time or include anything other than historical information are subject to risks and uncertainties, and actual results, actions or events could differ materially from those set forth in the FLS. FLS are not guarantees of future performance and are by their nature based on numerous assumptions. Although the FLS contained herein are based upon what CI Global Asset Management and the portfolio manager believe to be reasonable assumptions, neither CI Global Asset Management nor the portfolio manager can assure that actual results will be consistent with these FLS. The reader is cautioned to consider the FLS carefully and not to place undue reliance on FLS. Unless required by applicable law, it is not undertaken, and specifically disclaimed that there is any intention or obligation to update or revise FLS, whether as a result of new information, future events or otherwise.
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