No matter how experienced you are or how close you are to the action, when the shit truly hits the fan – as it is right now – you’re always going to be a step behind the curve. That’s just market reality.
Over the years I’ve spilled plenty of ink on geopolitical headaches and left the interest-rate sermons and Fed-watching to others. Because the big story isn’t monetary policy anymore. The world is shifting fast with anti-Western and non-Western powers aggressively fighting for a larger slice of the global influence cake.
Whether it’s the Chinese, the Russians, Islamists, or Hindus, the landscape is changing – and we damn well better build that reality into our portfolios.
Thankfully, many battle-hardened ex-long-term traders have quietly ditched the old Berkshire Hathaway gospel of “buy quality and sit on it forever.” Instead, they’ve built shorter-term, nimble portfolios that actually suit today’s chaotic environment. That’s a good move.
Right now, the war in the Gulf – sparked under Trump’s watch – is shredding many of our carefully laid investment plans. We’re being forced to readjust constantly in a world that keeps changing shape by the hour.
This isn’t the first war I’ve traded through, nor the first disaster that’s had people leaping out of tall buildings. But it might be the one that defines the future for the Western economics and growth more than any other in my lifetime.
As I write this, Trump is still threatening to “bomb the crap” out of Iran, including its oil-producing infrastructure. I know he doesn’t particularly want to pull the trigger – it would shred what little support he still gets from Americans and the rest of NATO (who, in my view, would happily kiss anyone’s backside as long as it doesn’t belong to Donald J. Trump). But we all know the man can change his mind in a heartbeat.
So, the million-dollar question remains: where the hell should we be putting our money?
You can chase oil higher if you like – and it might turn into a cracking trade in the short run. On the flip side, one surprise agreement could make the war premium evaporate overnight, which is exactly what usually happens.
To my mind, whatever oil does over the next week or so, this current spike cannot and will not last forever. Trying to pick the exact top – whether it’s $120, $150, or $200 – is about as scientific as licking your finger and sticking it in the air to see which way the wind is blowing. And quite frankly, that’s not the kind of lazy analysis you should be risking your hard-earned cash on.
That said, in a world where you can apparently decide whether you’re a man or a woman depending on which side of the bed you roll out of in the morning… if you fancy a punt on oil, I’m not going to stop you. Each to their own.
Overall, though, I can see another leg down in the indices coming. This surge in energy costs is going to slam the global economy, and with most Western economies already in a right old mess, the pain will be real. These economies won’t fix themselves overnight. The West – after years of wasting taxpayer money like there’s no tomorrow – simply wasn’t prepared. And that pain will hit hardest in over-regulated, badly managed Europe.
So, as I’ve been saying for the past year, I’m still far happier sitting in dollars than in euros or sterling.
When it comes to speculating, I think it’s wiser right now to look beyond financials and hunt for opportunities in the broader commodity space. And no, I don’t just mean oil or precious metals. Think non-ferrous metals and foodstuffs.
Corn, wheat, and beans look like they might ease off a bit more – and if they do, that could be a decent moment to pick up a few contracts on the dip. Copper and aluminium should find decent support going forward thanks to ongoing demand from armaments and construction, so also keep a close eye on those.
And if you’re after something really sweet? Look no further than chocolate. Cocoa prices have crashed nearly 75% from last year’s crazy highs and are now hovering near major support levels. You might have to sit on a position in the sweet brown stuff for a while, but a decent correction from here could easily open the door to a 50%+ rally. ($3000 to $4500). Now, that’s not something to sniff at.
I could have written some cheap clickbait, parroted what everyone else is obsessing over, and kicked off a pointless debate about whether Bloomberg or CNN has the better take. But honestly – who among us really knows what’s going to happen between the time I hit “send” on this and the time you read it?
As I said at the start, writing a weekly commentary is often a fool’s errand. Still, I’m grateful there are plenty of markets to play in – and not all of them hinge on who decides to bomb whom with what next.
Whatever you decide to do, Stay nimble out there.
Please note the political opinions expressed above are those of the author himself, and do not necessarily reflect the opinions of JP Fund Services AS.
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