Geopolitics and markets: lessons from Waterloo to the present day
By Daniel Mayor
Things are always happening in the world, and the markets, ever vigilant, react like a hyperactive seismograph. In recent years, geopolitics has once again become a determining factor, directly influencing financial markets.
One of the most famous—and also most mythologized—episodes in financial history is that of Waterloo and the Rothschilds. On June 18, 1815, Napoleon Bonaparte was defeated at Waterloo. At that time, communications were slow and news took days or weeks to spread. According to legend, Nathan Mayer Rothschild, founder of the London branch of the family, received the news of the Anglo-Prussian coalition’s victory before anyone else thanks to a private network of messengers and pigeons. With this information advantage, he reportedly went to the London Stock Exchange and began selling government bonds, causing panic among investors, who interpreted his behavior as a sign of defeat. When prices plummeted, Rothschild bought large volumes of debt at bargain prices; when the coalition’s true victory became known, bonds skyrocketed and he reportedly made a colossal profit.
Beyond the myth, the Waterloo episode illustrates how markets react to geopolitical events like a sensitive organism, capable of amplifying rumors and punishing misinformation.
In recent years, we have witnessed a number of disruptive events: Russia’s invasion of Ukraine in 2022, which demonstrated how a regional conflict can have global effects in a matter of hours and for years to come, and the tariff war initiated by the Trump administration in 2025, which disrupted international trade and reconfigured supply chains. These episodes confirm that financial markets are extremely reactive to geopolitics, reminding us that we are witnessing a change in the behavior of the major powers that exposes privileges, asymmetry, and tensions.
Faced with this volatility, an old debate resurfaces in the investment world: which is more important, timing the market correctly or staying invested? Historical evidence and experience show that staying in the market (remaining invested) is often much more important than trying to anticipate movements, as markets tend to recover even from the most severe shocks. In fact, markets spend most of their time rising, as long as the number of consumers and their purchasing power continue to grow.
As at Waterloo, where the order of Europe hung in the balance, every geopolitical upheaval reminds us of the fragility of stability. The markets, attentive to every twist of fate, continue to respond to the same impulses that have guided humanity since its origins: fear, hope, and the eternal search for balance between the two.