Global markets have entered a period of heightened uncertainty. The effective closure of the Strait of Hormuz has disrupted roughly 20% of the world’s oil and LNG supply, sending Brent crude spiking to nearly $120 per barrel before retreating to the $92–$100 range.

The VIX surged to its highest sustained level in nearly two years, the S&P 500 fell roughly 7% from its February peak, and international markets dropped 8–12%. Stagflation fears are back on the table, and the Fed has signaled a potential pause on expected rate cuts.

What History Tells Us

History offers some reassurance. Research from Charles Schwab and Hartford Funds shows the average S&P 500 drawdown following major geopolitical shocks is approximately 4.6%, with recovery typically occurring within six weeks, and the index has averaged 8.4% gains in the 12 months that follow.

That is exactly the environment where a thoughtfully constructed allocation to alternative investments tends to earn its place.

Why Alternatives Behave Differently

Real estate, private equity, private debt, and oil and gas are not marked to market daily, so they do not register the same whipsaw moves that publicly traded stocks do when headlines shift.

Private debt instruments with floating rates continue generating competitive income if the Fed holds rates higher for longer. Commercial real estate produces income that tends to hold up better than equity dividends when corporate margins compress.

And oil and gas, uniquely, does not merely weather an energy shock but can benefit from one. Upstream producers and royalty interests tied to domestic energy output have seen increased valuations precisely because of the supply disruption driving anxiety elsewhere.

A Reminder of What Diversification Is For

No investment is immune to a sustained downturn, and alternatives carry their own risks, including illiquidity and complexity.

But for portfolios heavily weighted toward public equities, the current environment is a useful reminder of what diversification across asset classes, not just sectors, is actually designed to do.

Let’s Talk About Your Portfolio

If recent market swings have you reassessing how your portfolio is positioned, reach out to Austin Wealth Specialists to discuss how alternative investments might fit your goals and risk tolerance.

Disclosure: Securities offered through Great Point Capital, LLC, Member FINRA SIPC. Investment Advisory Services offered through Vann Equity Management. Great Point Capital LLC, Vann Equity Management, and Austin Wealth Specialists are separate and unaffiliated. Educational only and not a recommendation or offer. Investing involves risk, including possible loss of principal. Not tax or legal advice. Consult your tax and legal advisors about your specific situation.