Navigating The War
Strategies, risk management, hedging ideas, strongest sectors, and more.
Our new “Wall of Worry” is getting taller by the day.
The war between the U.S. and Israel and Iran has now entered its second week and so far there are no real signs of de-escalation. Rhetoric and positioning from both sides actually says the opposite.
But do they truly mean the opposite…? Or is it just posturing?
Earlier today, Iran’s newly appointed Supreme Leader Mojtaba Khamenei made his first public remarks since taking power and the message was clear: Iran intends to escalate.
Khamenei said the Strait of Hormuz must remain closed as a “tool to pressure the enemy.” Iran knows that high oil prices not only puts pressure on American citizens, but political pressure on the Trump administration.
He also warned that all U.S. military bases in the Middle East should shut down immediately and said those bases could be attacked.
Roughly 20% of the world’s oil supply flows through the Strait of Hormuz. Since the war began, shipping through here has effectively stopped. What has that done? Increased oil prices significantly.
Iranian officials have said crude could spike toward $200 per barrel if the war continues. To me, this is further indication that they know high oil prices are negatively impacting Americans.
From a market perspective the message is clear, as long as the Strait of Hormuz remains closed there will be major pressure on global energy markets, in turn putting pressure on equity markets.
This is a difficult market to navigate, no doubt about it. But if you have the right plan and focus on the process rather than the outcome, you can still manage it very effectively.
In the remainder of this article I’ll walk through how I’ve been navigating the current environment, how I approach position sizing during periods of elevated volatility, the sectors and stocks continuing to show the most relative strength that could have bottomed before the market, my favorite hedging + trade ideas, and more.