George thank you for the weekly and for addressing a very timely, important and relevant topic. I am sure most of us have been wondering about the direction of the stock market since the war broke out. Having read your article, it seems you're saying that only a war accompanied by or causing an economic recession can cause significant negative long-term impact to the stock market. But isn't that precisely what this war on Iran may lead to? Significantly higher oil prices because of the continued closure of the strait of Hormuz that would cause massive global inflation and eventually a global economic recession. Or do you see the situation differently?
I should have clarified my position in the article, since my wording may have sounded contradictory. If the Strait of Hormuz remains effectively closed for an extended period, that could produce an oil‑supply shock large enough to push the global economy into recession and cause a drawdown that takes years to recover.
However, short‑lived or geographically contained conflicts typically produce only temporary market dips. I also think a prolonged U.S. military campaign is politically unlikely given current public and congressional constraints, which reduces the probability of a multi‑year closure of the Strait.
I am positioning the portfolio as this is a short war. I was wrong about the Russia-Ukraine war so take it with a grain of salt :)
George thank you for the weekly and for addressing a very timely, important and relevant topic. I am sure most of us have been wondering about the direction of the stock market since the war broke out. Having read your article, it seems you're saying that only a war accompanied by or causing an economic recession can cause significant negative long-term impact to the stock market. But isn't that precisely what this war on Iran may lead to? Significantly higher oil prices because of the continued closure of the strait of Hormuz that would cause massive global inflation and eventually a global economic recession. Or do you see the situation differently?
I should have clarified my position in the article, since my wording may have sounded contradictory. If the Strait of Hormuz remains effectively closed for an extended period, that could produce an oil‑supply shock large enough to push the global economy into recession and cause a drawdown that takes years to recover.
However, short‑lived or geographically contained conflicts typically produce only temporary market dips. I also think a prolonged U.S. military campaign is politically unlikely given current public and congressional constraints, which reduces the probability of a multi‑year closure of the Strait.
I am positioning the portfolio as this is a short war. I was wrong about the Russia-Ukraine war so take it with a grain of salt :)