Iran, Israel Conflict and Your Wallet

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How Middle East Tensions Are Moving Your Portfolio

The Middle East conflict just hit your investment account—and your gas tank. Israel's attack on Iran on June 13th has already created significant market volatility, and we're seeing the ripple effects across energy markets and your portfolio.

Here's what you need to know about how this geopolitical crisis is impacting your money, and what it means for your investment strategy.

The Energy Market Explosion

The Numbers That Matter:

• Oil prices surged 7% in just five days

• Energy stocks are rallying hard

• Gas prices projected to increase 10-25 cents per gallon (8% jump at the pump)

  
  

This has been the strongest week for energy stocks since October 2022. We haven't seen this kind of single-day increase in the energy sector since Russia invaded Ukraine. That's how significant this move has been.

What Energy Stocks Actually Are (And Why You Should Care)

Energy stocks in your portfolio include companies that:

• Produce oil and gas

• Distribute natural gas

• Work with natural resources

  
  

This sector typically sees volatility during geopolitical events—it's just part of the normal market cycle. But what's abnormal here is the connection to Middle East conflict, which adds an extra layer of uncertainty and potential for dramatic price swings.

The Strait of Hormuz: The $5 Gas Nightmare Scenario

Here's the big concern keeping analysts up at night: the Strait of Hormuz. This critical waterway is where global oil supply flows through. If the conflict escalates and impacts this strait's ability to function, we could see:

• Crude oil prices above $100 per barrel

• Gas prices hitting $5 per gallon in the U.S.

  
  

Nobody knows if this will happen, but it's the scenario we're watching closely.

The Winners: Energy and Defense Stocks Crushing It

Energy Stock Performance (Last Few Days):

• Exxon Mobil: +2.2%

• Chevron: +3%

• ConocoPhillips: +4%

• Diamondback Energy: +3.7% (biggest winner)

• Halliburton: +5.5%

  
  

Defense Contractors Also Winning:

• Lockheed Martin: +3%

• Northrop Grumman: +3%

• The S&P 500 Aerospace and Defense Index climbed to a record high this week

  
  

The Losers: Airlines and Cruise Lines Take the Hit

While energy companies are celebrating, travel companies are getting hammered because they're spending significantly more on fuel:

• United Airlines: Down

• Delta: Down

• American Airlines: Down

• Cruise Lines: Feeling the pain across the board

  
  

These companies are now less profitable because their fuel costs just skyrocketed.

What This Means for YOUR Portfolio

If you own broad market index funds (and if I'm managing your money, you do), then you probably own both the winners and the losers. Here's why that's actually good news:

The energy stocks might offset the losses in travel stocks.

This is exactly why diversification works—some investments zig when other investments zag. You're not putting all your eggs in one basket, so when one sector gets hit, another sector might be there to cushion the blow.

Your Investment Philosophy Reminder

This situation perfectly illustrates our key investment philosophy:

1. Buy shares in profitable companies

2. Own them as inexpensively as we can

3. Share as little of our profits with the IRS as possible

   
   

The companies seeing big wins this week—names you recognize like Exxon, Chevron, and Lockheed Martin—are impacting that part of your portfolio in a positive way.

The Bottom Line: Stay Diversified, Stay Informed

We're in uncharted territory with this Middle East conflict, and energy markets are responding accordingly. The key takeaways for your financial strategy:

• Monitor but don't panic: Geopolitical volatility is normal in energy sectors

• Trust your diversification: Your broad market exposure protects you from single-sector disasters

• Watch the Strait of Hormuz: This is the key indicator for whether we see $5 gas or things stabilize

• Remember the bigger picture: Short-term volatility doesn't change long-term investment strategy

  
  

Our prayers are with the people in Israel and Iran during this difficult time. We'll keep a watchful eye on how this develops and continue to monitor the impact on your portfolio.

Stay informed, stay diversified, and remember—every market challenge is also an opportunity for those who stay the course with a smart strategy.