James Alexander Booth @B3130jim: "Hello to Copiers and Followers, Stock..."

United Kingdom

Hello to Copiers and Followers, Stock markets rarely make major directional shifts while even faint glimmers of hope persist that the worst-case scenarios can still be avoided. Right now, US technology stocks are inching gradually lower, tracing what appears to be a rounding top formation on the charts. For many years, "buying the dip" has reliably rewarded investors, but stretched valuations combined with genuinely severe risks make the current environment far more precarious. Every additional day that Iran manages to restrict or effectively control traffic through the Strait of Hormuz—a critical chokepoint carrying roughly 20% of global oil and gas shipments—strengthens its negotiating position and raises the economic stakes. Oil prices have already spiked sharply (with Brent briefly surpassing $100 per barrel amid disruptions), while shipping has been severely curtailed, stranding vessels and crews. Yet broad equity markets, particularly the major US indices, have remained relatively sanguine, absorbing the news with only modest pullbacks rather than decisive selling. This complacency echoes classic human behavior observed during accidents or unfolding disasters, such as fires. Crowds often stand and watch with a detached curiosity: "Will it burn out on its own, or will it spread?" As long as others around them remain calm, individuals suppress their own instinct to panic. No one wants to be the first to overreact. But once the fire crosses a certain threshold—triggering nonlinear spread—the dynamics shift dramatically. A small incremental change in conditions can cause rapid expansion, leading to flashover, where the entire space ignites almost simultaneously. In markets, the parallel is striking: prices drift slowly at first, absorbing risks incrementally, until a tipping point is reached. Then the reaction becomes abrupt and self-reinforcing as everyone rushes for the exit at once. I believe this is precisely where stock markets stand today. Optimism around potential de-escalation (or the notion that external powers will quickly reopen the Strait) has kept downside limited so far, but the underlying pressures—high and volatile energy costs, inflation risks, and stretched valuations in growth sectors like technology—are building. A sudden shift in sentiment could accelerate selling pressure in a nonlinear fashion, much like the fire analogy. In this environment, the clearest beneficiaries from sustained geopolitical tension and elevated oil prices are likely to be the energy sector (particularly oil producers and related services) and gold as a traditional safe-haven and inflation hedge. While gold's performance has been volatile—surging initially on war fears before pulling back amid liquidity demands and shifting rate expectations—it retains appeal if disruptions persist. Oil, meanwhile, has shown more direct upside from the Hormuz situation, though prices can swing wildly with any negotiation headlines or military developments. Geopolitical events like this rarely resolve smoothly or predictably, and markets have a history of remaining calm far longer than fundamentals might justify, right up until they don't. Iran's strategy is to play for a long conflict and wage economic war by keeping the Straits of Hormuz closed. The United States currently has no viable plan to beat Iran. Much of the United states military look like relics. Large carrier groups have been disrupted by AI powered drone swarms and hypersonic missiles and these technological shifts are disrupting the world order. The key point is that United States cannot guarantee the free movement of goods throughout the world, which has been the foundation of the globalised econonmy that has formed over the past 80 years. The energy flows that power the world have been severed, but there's just enough in reserves to give hope. Everyday that passes hope fades and we move closer to the tipping point when panic starts. Regards, Jim $GOLD $OIL $NSDQ100

Not investment advice. The author may have financial interests in the mentioned instruments.

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Gold (Non Expiry)

OIL

Oil (Non Expiry)

NSDQ100

NASDAQ100 Index (Non Expiry)

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