In the recent Kentucky Derby, a long shot horse named Golden Tempo (GT) was the winner. Prior to the race, GT’s odds of winning were 23 to 1. To compound matters, GT started from the outmost position, where only three percent of previous Derby winners had come from. The early part of the race went as expected by many, with GT running dead last in a field of 18 horses. Remarkably, in the home stretch GT pulled ahead to win.
One month later, GT entered the Belmont. A smaller field with only nine horses, but a longer track. Same jockey and 6 to 1 odds this time. The race started the same way as the Derby, with GT running dead last. It also ended the same way, with GT pulling ahead in the final stretch and winning the Belmont.
What’s this got to do with investing? Well, let’s quickly review the first six months of 2026. In late February, the U.S. began a bombing campaign against Iran. Iran responded in several ways, most notably locking down the Strait of Hormuz. This restricted the global supply of oil and prices shot up to over $100 a barrel! Average gasoline prices rose to over $4 a gallon. Inflation rose to more than four percent, well above the Federal Reserve target of two percent. This dimmed the hopes of any further interest rate cuts in 2026. The U.S. Iran conflict, combined with the fact that Israel and Lebanon were exchanging fire, created a tense situation in the middle east.
These conditions could make it seem like a good time to pull your horse from the race, or stated another way, to get out of the stock market. A positive second quarter certainly looked like a long shot! Yet, despite these conditions, both U.S. and foreign stock markets performed strongly in the second quarter. The second quarter results are a good example of why it doesn’t make sense to react to short-term events or conditions.
Most investors prefer sure bets to long shots. We prefer certainty to uncertainty. The market is not a sure bet, especially in the short run. If you invest in the stock market for a single day, your odds of a positive return are 55 percent. Not much better than a coin flip. If you stay invested for a year, the odds go to 75 percent. At five years, that goes to 89 percent. And in 10 years, there is a 96 percent chance of having positive returns. Not a sure bet, but definitely not a long shot!
Dr. David Ashby is a Certified Financial Planner and the retired Peoples Bank Professor of Finance at Southern Arkansas University. He holds degrees in accounting and business administration and a doctorate in finance from Louisiana Tech.
