Oil hit $120 a barrel this month. The S&P dropped 4.5% in three weeks and mortgage rates spiked to 6.53%… the highest since September.
If your entire portfolio moves with the stock market, March has been brutal.
The thing nobody wants to admit is this kind of volatility isn’t going away. The Strait of Hormuz is effectively closed, which means one-fifth of the world’s oil supply is stuck. Qatar declared force majeure on its gas exports. The IEA has called it the “greatest global energy security challenge in history.”
That’s not hyperbole. That’s the head of the International Energy Agency describing what’s happening right now.
Before the war started, analysts expected rate cuts this year. Maybe two, maybe more. But the math has completely changed.
Higher oil prices push inflation higher, and the Fed can’t cut rates when inflation is rising. But they also can’t raise rates aggressively without crushing an already shaky economy. Mark Zandi at Moody’s put it bluntly: the Fed is in a “no-win situation.”
So they’re holding steady at 3.50-3.75%, watching and waiting while mortgage rates keep climbing. The 30-year fixed jumped to 6.53% on Friday, and home loan applications dropped 10.5% last week. The spring housing market (traditionally the busiest season) is stalling before it even starts.
For anyone with a portfolio concentrated in stocks or rate-sensitive assets, this is the worst kind of environment. Volatility on one side, inflation pressure on the other, and no clear path forward.
I’m not going to pretend I know how this war ends, nobody does.
Trump says it’s “very complete, pretty much.” Analysts say high prices could persist for months even if a deal gets signed tomorrow, because infrastructure has been damaged and shipping routes remain dangerous. The supply chain doesn’t snap back overnight… especially when drone attacks can come from hidden launch sites for months after the main conflict ends.
But here’s what I do know: this won’t be the last crisis.
The last five years gave us a pandemic, a war in Ukraine, inflation spikes, the fastest rate hiking cycle in decades and now a war in the Middle East threatening global energy supplies. Each one came with predictions that things would “return to normal.” They didn’t. The new normal is volatility, and Morgan Stanley’s research team said it plainly in their latest outlook: “Geopolitical risk is becoming a persistent part of the backdrop, not merely episodic.”
If your investment strategy assumes calm seas, you’re betting against the evidence.
Most people think they’re diversified. They own a total stock market index fund, an international fund, maybe some bonds. But that’s just different flavors of the same thing.
When markets crash, correlations spike and everything falls together. We saw it in 2008 when stocks and bonds both dropped. We saw it in 2022 when the traditional 60/40 portfolio had its worst year in decades. We’re seeing it now as energy prices push inflation higher while simultaneously dragging down growth expectations.
The S&P dropped from 6,816 to 6,506 in three weeks (a 4.55% decline.) That might not sound catastrophic, but if you’re retired or close to it, watching your portfolio drop while prices at the pump climb feels very different than watching numbers move on a screen. (I talked to a club member last week who described it as “getting squeezed from both ends.”)
The thing about volatility is, it only hurts if all your wealth is tied to the thing that’s moving. If you own assets that generate income regardless of what the stock market does, a correction becomes noise rather than a crisis. The headlines still exist, but they don’t dictate whether you can pay your bills or fund your lifestyle.
Real estate, particularly private real estate that isn’t traded on public exchanges, has historically shown low correlation with stocks.
When the S&P drops 5%, apartment buildings don’t suddenly lose tenants. The rent keeps coming in, distributions keep flowing, and the income doesn’t depend on selling shares at favorable prices or hoping the market recovers before you need the money. Tenants need a place to live whether oil is at $80 or $120. That basic human need creates a floor under the income that stock dividends simply don’t have.
This isn’t theoretical. In the Co-Investing Club, we’ve invested in workforce housing deals in Cleveland that kept paying their 8% distribution yields straight through the volatility of 2022 and 2023. Those distributions showed up quarterly, regardless of what headlines said. The operators sent their reports, the tenants paid their rent, and the checks cleared. Meanwhile, I watched friends stress over their brokerage statements every time Jerome Powell opened his mouth.
That’s a fundamentally different experience than watching your 401(k) balance swing with every news cycle.