The recent Iran conflict has triggered the biggest wave of risk-off selling since last April's Liberation Day, with stocks accelerating their selloff outside the US and oil spiking for a second day. Investors even took profits in gold as the dollar continued to surge, creating what looks like a buying opportunity but comes with real risks.

Historical data from the Global Investment Returns Yearbook shows that while geopolitical shocks are usually transitory, there are exceptions. The 20th century's two world wars both inflicted financial losses, though none were as severe as the four greatest peacetime bear markets since 1900. Countries that lost world wars or sustained terrible damage did worst, while victors and those that avoided conflicts did best.

Despite the selloff appearing as a buying opportunity, it's not free money. The odds favor the optimists, with the war likely burning out after a matter of weeks, falling far short of damage from world wars or the Yom Kippur War. However, those buying must hope to be compensated for that risk, with chances being good but less than 100%. The conflict's impact on markets underscores that geopolitical events can create opportunities, but only for those willing to accept the accompanying risks.