Investors are climbing a high wall of worries in 2026. With wars in the Middle East and Ukraine, messy trade disputes in the world’s major economic regions, growing fears over the impact of artificial intelligence, and deep political divisions in the United States and elsewhere, it can be difficult to remove emotions from practical investment decisions.
The war in Iran is the latest example. Each day brings a new distressing headline about a fragile ceasefire, elevated oil prices and the threat of renewed military action. The world looks terrible right now. It often looks terrible. But at times like these, I always try to remember that difficult times can also bring compelling investment opportunities for patient, long-term investors.
I’ve been in this business now for nearly 40 years, and I have counted the number of market disruptions I’ve experienced. It’s about 25, which means there has been a major event in the market, on average, every 18 months during my career. So I’m not saying be happy about bad times; I’m saying remember what they represent. Remember that they can present opportunities as share prices go on sale. And, perhaps most importantly, remember that a better day is coming.
Global equities have powered through decades of conflicts and crises
That expectation also appears to be reflected in U.S. stocks. Despite sharply higher oil prices since the Iran war began, the S&P 500 Index hit a new record high last week. Things could change, but for the time being, the stock market is anticipating a swift end to the hostilities. We are seeing the same message in oil futures, which are now indicating that prices should fall toward $73 a barrel by the end of the year, roughly where they were before the U.S. and Israel attacked Iran on February 28.
Much earlier in my career, leadership shifted back and forth between U.S. and non-U.S. stocks. It was like a game of ping-pong. I think there is a strong chance that we are headed back to that type of investment environment, where U.S. stocks lead for a while, but international and emerging market stocks also have their time to shine.
Energy sector on the rise
I am also constructive on the energy sector, which has been out of favor with investors for many years. Yes, oil companies such as ExxonMobil, Royal Dutch Shell and TotalEnergies have benefited from higher oil prices during the Iran conflict, but I find the sector attractive on a long-term basis as well.I am also sifting through theartificial intelligence wreckage for companies that may have been unfairly hit by fears that easy-to-use AI applications will impair their business. Those include large software companies, such as Germany’s SAP, and companies in the online travel space, including China’s Trip.com and Spain’s Amadeus IT Group. These companies are AI enablers, in my view, not "AI roadkill."
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