Article written by Jason Choy, InvestNow, Senior Portfolio Manager – April 2026

Why every crisis feels different – but often follows a familiar path

Every market crisis feels unique in the moment. The headlines are alarming, the causes feel unprecedented, and the uncertainty can make even experienced Kiwi investors wonder whether “this time is different”.

Yet history tells us something important: while the trigger of each crisis differs, the sequence often rhymes.

By looking back at major crises like the Global Financial Crisis, the COVID-19 pandemic, and now the recent market volatility due to the conflict in the middle east, we can identify a recognisable anatomy of how these events unfold. Understanding these stages can help you navigate the current volatility and separate what is truly informative for your investment strategy from what is simply noise.

Stage One: The Trigger Event

Something breaks. Every crisis begins with a catalyst – a moment that suddenly changes how markets perceive risk.

• Historical Examples: In 2008, it was the collapse of Lehman Brothers; in 2020, it was the rapid global spread of COVID-19; and in 2022, Russia’s invasion of Ukraine triggered a global energy shock.
• Current Parallel: Most recently, the ongoing conflict in the middle east and the escalation of tensions with Iran in 2026 created fears over oil supply disruptions through the Strait of Hormuz – a key artery for global energy trade which halted the flow of 20 million barrels of oil per day.

This first stage is defined by surprise. Markets dislike uncertainty more than bad news, and these initial reactions are often sharp and sudden.

Stage Two: The Market Repricing

Markets move before the economy does. This is usually the first stage investors experience. In what experts call a “pricing game” – where perception outweighs reality – market participants don’t wait for hard economic data; they move instantly based on expectations and uncertainty.

The key markers of this stage include a sharp share market sell-off, a spike in the volatility index, and a “flight to safety”, where investors pile into traditional safe haven assets like cash, gold or treasury bonds.

• Classic Case: Between 19 February and 23 March 2020, the S&P 500 fell by roughly a third amid widespread panic about the spread of COVID-19. This happened before many economies had actually fully shut down.

• Present Day Relevance: We saw this stage once again in early March 2026 when global equity markets sold off amid fears of sustained energy price spikes triggered by the conflict in the middle east and the escalation of tensions with Iran. Major indices fell between 8–10% in just a few weeks – despite very little having actually changed in the real economy at that point.

During this stage, a “contagion of fear” can take hold, where investors sell assets not based on their fundamental value, but because they see others selling.

In summary, this stage is driven by fear, headlines, and perception, not lived reality.

Stage Three: The Transmission Stage

The shock enters the real economy. This is when the crisis stops being a “market story” and starts becoming a real economic story.

• Mechanism: The crisis starts to flow through supply chains and costs. For the current middle east conflict, this has meant soaring fuel prices, which don’t just hurt Kiwis at the pump, but can also bleed into transport costs, resulting in higher grocery prices and broader inflation expectations.
• Second Order Effects: The crisis can also change how people and businesses behave. Fearing a recession, businesses may stop hiring and consumers often cut back on discretionary spending. This is how an initial shock can spiral into a broader economic slowdown.

This is the stage where people begin feeling the crisis impacting their everyday lives.

Stage Four: The Policy Response

Authorities step in. This stage marks the shift from panic to management as the likes of central banks and governments move to provide stability.

• Typical Responses include central banks cutting interest rates (as the Reserve Bank of New Zealand did during the Global Financial Crisis and COVID-19 pandemic) or governments releasing strategic oil reserves to stabilise prices.
• In the current middle east conflict, the major responses so far have seen the International Energy Agency coordinating the release of 400 million barrels of oil to compensate for disruptions. Meanwhile, President Trump has been enforcing a “maximum pressure” strategy, combining a naval blockade of Iranian ports with conditional, rolling ceasefire extensions designed to force a negotiated settlement.

This stage, and the associated responses, often helps signal whether policymakers believe the issue is temporary or systemic.

Stage Five: Stabilisation and Narrative Shift

Markets stop getting worse. This is one of the most misunderstood stages of a crisis.

Importantly, this stage does not require the original trigger event to be fully resolved. The war may still be ongoing, or economic conditions may still be weak. Irrespective, markets can begin stabilising once investors believe that the worst‑case scenarios are becoming less likely, even if the underlying situation remains challenging.

• Forward-Looking: The key to understanding this stage is that markets are always forward-looking and can often bottom out months before the actual economy recovers. During the Global Financial Crisis, markets bottomed in March 2009 – months before unemployment peaked. During COVID, global markets began recovering in late March 2020 – while much of the world was still locked down.
• The April 2026 Recovery: We’ve seen this familiar pattern again with the conflict in the middle east. Despite ongoing geopolitical uncertainty and no guarantee the worst of the conflict is behind us, global equity markets rebounded sharply in April, with major indices climbing back to – and in some cases exceeding – previous all-time highs.

For investors that remained steadfast throughout the volatility, whilst not guaranteed to prevent any losses in capital values, staying the course can pay off.

Navigating Volatility

Of course, navigating a crisis always seems simple with the benefit of hindsight. However, when you’re seeing your portfolio drastically drop in real-time, this can trigger the urge to act in order to try and stem the losses.

But there is a heavy hidden cost to fleeing to lower-risk investments like cash during these stages. Investors who moved out of markets during a crisis need to time two decisions perfectly: when to sell and when to re-enter.

In reality, very few will get even one of these right, let alone both. Many who exited during the height of this March’s anxiety missed the rapid April rebound, which occurred in a matter of weeks, not years.

Research from the Wells Fargo Investment Institute shows just how damaging this can be. Looking at the S&P 500 over the last 30 years (1995–2025), missing just the 30 best performing days would have seen an investor’s annual average return drop from 8.4% to just 2.1%.

What makes market timing even more treacherous is that the best days and worst days often cluster together. Historically, the market’s strongest gains frequently occur in the midst of a bear market or recession – often within days of the steepest drops.

A striking example occurred in March 2020: during just eight trading days between March 9 and March 18, the market experienced three of its 30 best days and five of its 30 worst days. Because these “best” and “worst” days are often separated by only 24 or 48 hours, trying to jump out to avoid a dip almost guarantees you will miss the subsequent roar back higher.

Staying the course then is not just about patience – it’s about ensuring you are in the room when those few critical “best days” occur.

Bringing It Back to Your Plan: Staying Informed and Avoiding the Noise

Understanding the anatomy of a crisis is only half the battle; the other half is applying that knowledge to your own portfolio. This is why one of our core principles at InvestNow is: Stay informed, but don’t react to the noise.

For a long-term investor, it is vital to distinguish between what is truly informative – such as major changes to your personal goals or a fundamental shift in the strategy of the funds you own – and what is simply noise. Noise includes overcooked headlines designed to instil fear and short-term market fluctuations that have little impact on the value of a business, let alone your portfolio over the long-term.

For KiwiSaver investors with decades-long horizons, the current volatility is usually just a temporary episode in a much longer journey. Your investment strategy should only evolve when your objectives or constraints change, not because the headlines are unsettling. Carelessly switching from a higher-risk fund to a lower-risk fund during a market downturn could be one of the most damaging moves you can make, as it can both lock in your losses, as well as cause you to miss the subsequent rebound.

What History Repeatedly Shows Long-Term Investors

• Markets have consistently recovered.
• New all-time highs have followed every past crisis.
• Long-term investors who stayed the course were rewarded.

Of course, with the current Middle East conflict still unfolding, there are no guarantees that the worst of market volatility is behind us. Periods of uncertainty can last longer than expected, and markets rarely move in a straight line.

However, history provides a powerful reminder: while short‑term outcomes are unpredictable, the long‑term direction of markets has been remarkably resilient. Time and again, patient investors have been rewarded not for avoiding volatility, but for enduring it.

While history doesn’t repeat, it often rhymes. Once again, the markets are reminding us that volatility is the price – the admission fee – investors pay for long-term returns.

Staying disciplined, staying diversified, and staying aligned with your long-term plan remains the most powerful decision you can make to ensure your future financial success.

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