In 1945, the Second World War ended. Hiroo Onoda did not get the memo.
A Japanese intelligence officer stationed in the Philippine jungle, Onoda kept fighting for nearly 30 years after Japan surrendered—dismissing every leaflet as enemy propaganda, ambushing patrols, living off the land. He laid down his arms only in 1974.
I think about Onoda when I watch investors react to volatility—not the ones who panic and sell, but the ones who say: “I’ll wait for clarity. I’ll get back in when things settle.”
They are waiting for a signal that may never come.
Do not seek certainty in inherently uncertain domains.
Shock and bounce
Since US and Israeli strikes on Iran began in late February, that instinct has been everywhere. Oil surged. The Nifty 50 fell nearly 11%, then bounced back around 7%. The daily ups and downs continue.
The questions remain unchanged. Should I wait for the war to end to invest? Should I exit equities? What do I do about my SIPs?
The assumption behind these questions is that someone knows when the war will end. They expect certainty. How would I, who did not know when the war would start, know when it will end?
The oil question
The World Bank has called this the largest oil supply shock in history. The Strait of Hormuz—through which roughly 35% of global seaborne crude passes—was closed by Iran after strikes began and remains only partially open. Brent crude, which was at $67–70 before the conflict, surged above $120 at its peak and remains more than 50% higher than at the start of the year.
And yet, this is still not 1973.
During the OPEC embargo and the 1978 Iran revolution, oil was physically removed from the market, with production cut by 7% and 4% respectively. Today, the oil is still in the ground. What has been disrupted is routing and risk premium. Routing disruptions tend to be self-correcting. For oil to mechanically trigger a recession, prices would need to remain above $120 for multiple quarters—not weeks.
No straight line
A ceasefire was declared on 8 April. It has been violated by both sides. The US and Iran are still negotiating a 14-point memorandum of understanding. Israel says it still has “goals to complete.”
The region remains unresolved.
Investors waiting for the all-clear may wait a long time.
After the Gulf War ended in 1991, US markets rallied—but the global economy still slipped into recession. After the 2003 Iraq War, oil fell briefly, then climbed for five years.
There is deeper randomness at work.
The Fed cut rates twice in 2024—yet US bond yields rose.
China’s GDP compounded for decades—yet its stock market disappointed.
The rules we cling to—“peace means rally”—are comforting. They are often wrong.
A world turning inward
Every major economy has been reminded that energy security is national security. Countries are looking inward. The US is reshoring energy production. Europe is rewiring supply chains. India is diversifying its crude basket—Russian oil, negligible before 2022, now accounts for over 35% of imports.
Supply chain resilience costs money. Strategic stockpiling costs money. These structural headwinds will not disappear when a ceasefire is signed.
Margin reality
For Indian investors, the real risk is not headlines but margins, particularly in small and midcaps.
During FY2011–14, when crude stayed above $100 for nearly three years, median EBIT margins of small and midcap companies fell by over 300 basis points. The same pattern repeated in 2022. Today, with Brent above $100 and OMC losses estimated at ₹30,000 crore a month, margin pressure is already visible in earnings.
Small and midcaps feel this most acutely—through weaker pricing power, longer working capital cycles and thinner buffers. Large caps are better insulated.
What should investors do?
Do not stop SIPs. Investing through a correction means buying more units at lower prices. A 20% correction in net asset value (NAV) means 25% more units accumulated.
If heavily concentrated in small and midcap funds, review that allocation. Margin compression could persist for another two to three quarters.
Moderate return expectations. If India’s nominal GDP grows at 8–10%, equity returns will remain positive but closer to economic reality than the 20% of recent years. Wealth creation comes from realistic expectations, not unbridled optimism.
Build a portfolio that survives even if your view is wrong. In the past year, gold returned over 40% in rupee terms while equity markets fell. Hybrid and multi-asset allocation funds are built for such environments, delivering around 11% median rolling returns over two decades with roughly half the volatility of pure equity.
Left to ourselves, we chase hot asset classes. In January 2026, around ₹30,000 crore flowed into gold and silver ETFs. Since then, both are down 20–40%.
Onoda’s tragedy was not that he was a bad soldier. He was an exceptional one. His tragedy was that he kept optimizing for a reality that no longer existed, waiting for a certainty that never came while life moved on outside the jungle.
The war he was fighting had been over for twenty-nine years.
Do not wait that long to invest.
Kalpen Parekh is MD & CEO of DSP Mutual Fund.