When the Pressure Spikes, We Don’t Panic – We Rely on the Plan

By the time you’re reading this on Wednesday, you’ve probably had a couple days to process the weekend headlines. Maybe you glanced at them once and moved on. Maybe you read every update.
Either way, when geopolitical tension ramps up quickly, it creates that familiar feeling in your stomach. Not fear perhaps, but certainly tension.
So let me start with the part that matters most. We’re not scrambling. And more importantly, we don’t need to.

This is why we positioned portfolios the way we did

Long before this past weekend, we made deliberate adjustments designed for a world that’s becoming more fragmented and supply-driven.
Back in November 2025, we increased exposure to U.S. value stocks while trimming quality and adding momentum. That wasn’t a reaction to one event. It was about balance. Over time, markets can become concentrated in a narrow group of growth names. That works, until volatility shows up.
Value exposure helps anchor a portfolio. These tend to be businesses with steadier cash flows and pricing power. Not exciting dinner party stories. Just durable companies that can keep operating when the headlines get loud.
In September 2025, we also increased exposure to Global Aerospace & Defense. Again, not a short-term trade. We expected a multi-year modernization cycle supported by rising government spending. In a world where geopolitical tension is becoming more structural, defense spending tends to be structural too.
And we’ve maintained bond exposure as a stabilizer, while staying realistic about something important: in a supply-shock world, long-term government bonds aren’t always the perfect cushion people assume they’ll be.
None of this was done because of one weekend. It was done because the environment has been shifting for some time.
That’s the difference between reacting and preparing.

Now, about the weekend

Over the weekend, the conflict involving Iran, Israel, and U.S. forces intensified and expanded across the region. Retaliatory strikes followed. Infrastructure was targeted. Energy facilities were disrupted.
When something like this happens, markets immediately focus on one thing: Supply.
Think of the global economy like a garden hose stretched across the yard. Most days, water flows and nobody thinks twice. But if the hose kinks in one spot, pressure builds everywhere. Right now, that potential “kink” is energy.
There are two main channels we’re watching:

• Disruption to energy transport through the Strait of Hormuz
• Damage to energy production infrastructure in the region

Qatar, a major natural gas supplier, shut down production over the weekend after drone strikes targeted its facilities. Saudi Arabia paused production at a refinery after an attack. Those aren’t theoretical risks. They’re real operational disruptions.
And that’s where stagflation risk creeps into the conversation. Not because demand collapses. But because constrained supply can push costs higher while growth slows. That combination complicates policy and markets alike.

The three variables that matter most

From here, the path depends on three things:

1. How long the hostilities last
2. How severely energy transit is disrupted
3. What political end-state emerges

Their interaction determines whether this is a short-term volatility shock or something more persistent.
The Strait of Hormuz is especially important. Roughly 20% of global oil consumption and 20–25% of global natural gas trade moves through that chokepoint. Oil is globally fungible. Natural gas is more regionally segmented, which means price dislocations can be sharper if disruptions become severe.
We estimate there’s roughly a 10–14 day buffer for how energy markets could handle disruptions. That doesn’t eliminate risk. It simply suggests the system can absorb stress for a period before supply constraints become binding.
Right now, we still view this primarily as a volatility shock. But we’re watching closely for signs of something more durable.