Stocks shrugged off war jitters, and market timers got a lesson

The stock market was handed a geopolitical stress test this year, and the obvious trade did not work.

MarketWatch columnist Mark Hulbert wrote July 21 that investors who thought a Middle East war would make 2026 easy to call have instead been shown how stubbornly unpredictable markets can be.

Hulbert was responding to Charles Schwab strategists, who recently said investors are entering a stretch in which making money in stocks will be harder. Schwab’s strategists described the period of easy index gains as over, according to Hulbert.

Hulbert’s pushback was blunt: he argued that the easy era was a mirage. In his view, investors tend to look backward and treat past market moves as if they were clear in advance, even when they were anything but.

The war trade that missed

To make the point, Hulbert asked readers to consider what they might have forecast on New Year’s Day if they had known that a war in the Middle East would begin at the end of February and still be underway in July.

Under that scenario, he wrote, many investors likely would have expected U.S. stocks to be down, gold to be up and Treasury yields to fall as investors sought safety.

The actual first-half scorecard ran the other way. Hulbert said the S&P 500 delivered a 10.2% total return in the first six months of 2026, about double its historical average. Gold fell 7%, while the 10-year Treasury yield rose 0.26 percentage point.

That gap between the expected playbook and the actual market move is the heart of Hulbert’s warning. The danger, he argued, is that investors convince themselves the past was predictable, then take bigger risks because they believe the next call will be just as clear.

Simple math, tough game

Hulbert also pointed to the long record of large-cap, actively managed U.S. stock funds. A chart in his column tracked the share of those funds that beat the S&P 500 in each of the past 25 calendar years, which he said shows how hard it has been to top the broad market.

He cited William Sharpe, the 1990 Nobel laureate in economics, who argued decades ago that active managers as a group are bound by arithmetic. Before fees and trading costs, Hulbert wrote, the market is a zero-sum contest. After those costs, it becomes a losing proposition for active managers in the aggregate.

The practical message for ordinary investors was less flashy than any hot market call: be skeptical of experts who sound too certain about what they can deliver.

Hulbert is a regular MarketWatch contributor, and his Hulbert Ratings service tracks investment newsletters that pay a flat fee to be audited.

This story draws on original reporting from MarketWatch.