Worried about your investments because of the Iran war? Dave Ramsey says stay the course — here’s why the data backs him up

It’s easier said than done when markets are turbulent and your retirement savings are on the line. But Ramsey’s position is backed by decades of market history — and right now, Canadian investors have their own version of this story unfolding in real time.

What’s happening in Canada

The TSX hasn’t been immune. With Canada’s stock market weighted toward energy and resources, conflict in the Middle East hits closer to home here than in many other countries. When oil prices spiked due to Strait of Hormuz fears in mid-March, Canadian Natural Resources Ltd. and Suncor both gained roughly 3% on a day the broader TSX fell. This is a clear illustration of how Canada’s resource-heavy index responds differently to geopolitical strife than most global markets (2).

That’s the nature of a resource-heavy index — it responds to stock market disruptors differently than the S&P 500 would, sometimes absorbing shocks better and sometimes amplifying them. Either way, the swings can feel unsettling.

But the S&P/TSX Composite has delivered an annualized total return of roughly 9.1% since 1956 — through oil crises, recessions, a financial catastrophe and a global pandemic. In each case, the market dropped, recovered and eventually climbed higher (3).

The TSX has been there before

The COVID crash is the most recent example most Canadians remember. In March 2020, the TSX fell 37% — its worst single-day drop since 1940. News reports about the virus were relentless, people were afraid and no one knew how long it would last.

The TSX took eight months to fully recover its losses — and investors who stayed in were rewarded (3). Those who panicked and sold locked in losses they didn’t have to take.

That pattern is consistent going back over 150 years. According to Morningstar’s long-term analysis of market crashes, every bear market over that span of time eventually recovered and reached new highs — even after the 1929 crash, the dot-com bust at the turn of the century and the 2008 financial crisis (4). The recoveries have varied in length, but have always come.

Why selling feels right but usually isn’t

When markets fall, selling feels like taking back some semblance of control. In reality, it often just makes things worse.

The problem is timing. Recoveries can happen fast, sometimes before the crisis that triggered the sell-off has even resolved. Investors who sell during the drop frequently miss the strongest rebound days while sitting on the sidelines waiting for everything to feel safe again. By the time confidence returns, much of the recovery is already over.