Markets Are Swinging on Every Iran Headline. Here Is Why Long Term Investors Should Resist the Urge to React.

If you're getting dizzy watching the stock market, you're not alone. Volatility has spiked this year, and the S&P 500 (SNPINDEX: ^GSPC) seems to be swinging every day based on the latest news out of Iran or President Trump's most recent social media posts.

For investors, it's a challenging market environment, but it also presents a conundrum. With volatility comes opportunity, but it's often a fool's errand to chase it, trying to time the market bottom or the bottom on an individual stock, especially in a situation as hard to predict as the Iran war.

For long-term investors, there's a better way to approach it.

Image source: Getty Images.

Take a breath

It's worth remembering, during geopolitical crises like this one, that the stock market has faced similar challenges many times before. While a bear market isn't out of the ordinary, the S&P 500 has always returned to an all-time high afterwards. That includes previous shocks like the Great Depression, World War II, the oil embargo and stagflation of the 1970s, 9/11, the financial crisis, the pandemic, and many more.

Looking at it from that perspective, the war in Iran looks more like a bump in the road rather than a brick wall.

Control what you can control

First, remember that you don't need to do anything. Just because markets are moving, you don't need to change your positions. Often, doing nothing is the best move. Some of your holdings might be down substantially, but if you've done the work of putting together a diversified portfolio of high-quality companies at fair prices, you should do well over the long term.

Times like these are also a good opportunity to build up your cash pile to deploy if share prices fall low enough. Along those lines, it's a good idea to make a watch list of stocks you're interested in buying, along with the price at which you'd pull the trigger. You might get some good opportunities if the volatility continues.

The U.S. stock market is still undefeated

While the S&P 500 looks like it's heading for a down month in March, the index has always delivered positive returns over a long enough period of time. If you're looking for a place to start investing, consider an S&P 500 ETF like the Vanguard S&P 500 ETF (NYSEMKT: VOO) or the State Street SPDR S&P 500 ETF (NYSEMKT: SPY).

Times might be tough, but investing doesn't have to be.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Vanguard S&P 500 ETF. The Motley Fool has a disclosure policy.