Categories: Stock Market
Topics: U.S. Dollar

How to Invest During War

You are going to see a plethora of takes about the Middle East today. 

Everyone who quickly became an AI “expert” this summer is now going to transition into an 
Arab-Israeli policy wonk. 

It’s as predictable as the changing of the seasons. 

These “experts” will tell you how to invest based on the events of this past weekend. I’ve already seen calls for stock market crashes, soaring oil, and rising gold. 

Worse, they’ll tell you what the market should be doing, like they know best and the market is wrong. Here’s one such example. Peter Schiff tweeted:

So far the reaction in the markets to the tragic events in #Israel and what they imply, especially considering Iran's role, is far too muted. #Oil should be up a lot more than $4 and #gold a lot more than $15. Treasuries and stock market futures should be getting hit much harder.

— Peter Schiff (@PeterSchiff) October 9, 2023

I don’t have a take on the attacks on Israel this past weekend. 

My readers were already long gold and oil — for fundamental reasons, not one-off events. 

Making knee-jerk reactions to headlines, especially with your hard earned capital, is usually a mistake. 

In fact, when you’re an actual stock market operator and not an armchair analyst, your research and conclusions often front-run global happenings. So when they do happen, you’re already in position and don’t have to react emotionally. 

Investing is about cycles. Not reacting to isolated events. That’s why I put it right in the title of this publication. 

It’s Daily Profit Cycle. 

Not Daily Headline Chaser.

Case in point. In the August issue of Foundational Profits I laid out the case for higher oil, telling readers on August 11 that: 

On the whole, more time-tested indicators are flashing bearish than bullish. We remain overall cautious though we of course have had select long positions on for the past year, and will continue to, albeit while still holding a good bit of cash.

This period ahead of what looks to be a softening job market into Q4 and next year will allow us to get long of energy once again as oil breaks out, and will keep inflation sticky high. But we’ll continue to wait to get longer of other commodities, like copper, until we get closer to a rate cut, which I don’t see happening until next year.

I went on to recommend a basket of oil and gas producers. 

We didn’t need a Gulf-area event to tell us it was time to buy oil. 

It’s a similar story with being positioned overall defensively and being long of gold. 

We weren’t positioned that way for a new war to break out. But what happened this weekend certainly confirmed that we were positioned correctly. 

And that’s the difference between professionals and pundits. 

If you want to invest with the latter, go watch CNBC or pay for some guy’s letter who paper trades his portfolio. 

If you want to follow a professional who built and manages his own wealth, and shows you what he’s buying and selling every month, you can see exactly how I’m positioned right now.

Nick Hodge
Publisher, Daily Profit Cycle