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Fears of a Wider Mid-East War are Growing ...

edited June 18 in Other Investing
Per yesterday's NYT: "Fears of a wider war were growing on Tuesday after President Trump called for Iran’s “unconditional surrender,” cited the possibility of killing its supreme leader and referred to Israel’s war efforts with the word “we” — all apparent suggestions that the United States could enter the conflict against Iran."

In view of the above rather alarming news item, and as a retired investor who doesn't need a lot more money, I am seriously considering increasing my cash position by reducing my portfolio's equity related holdings. I am curious what, if anything, other investors are planning to do, or are perhaps contemplating doing, if the above fears become reality?

At this time, futures are in a slight downward trend. At my age, I prefer to err on the side of caution.

Comments

  • Hi Fred, I thought I might venture back into bond oefs this year, as CDs mature. But with the political chaos this year, it is just too complicated for me to trust investing options other than CDs and MMs. I had 2 CDs mature this week, and I bought a 1 year CD at a 4.3% rate and put about the same amount of remaining money in a MM paying 4.27%. Good luck with your decision of what to do with your money.
  • edited June 18
    One never knows where these things will lead. I’d say it’s pretty much a done deal the U.S. gets directly involved. Bloomberg is reporting as much this evening.

    It’s never a bad time to reassess how much risk one wants to assume. I pulled back a bit a few weeks ago. But, honestly, it had nothing to do with the state of the world or Tump or war or any economic projections. It was just a realistic appraisal of the risk appropriate at my age. When younger I’d “dumpster-dive” as things fell out of bed believing they’d someday turn around and reward me. But at an older age that’s a harder game to play. So playing it safe.

    Nice to see you posting Fred. There’s quite a bit of ongoing discussion in regard to the Mid-East situation running through different threads.
  • We're in our mid-80s, and pretty much in the same position financially. The allocation varies, but using Schwab the lineup right now is 59% SUTXX mmkt and 41% fixed income. The fixed ladder is 56% Treasury out to 1/28, and 44% CDs, out to 6/27.
  • You should just follow my lead and do the opposite of what I do. I'm a great barometer, that way. I remember the '08-'09 GFC. I was stashing 403b money into EM bonds. It was a great ride. But what I see more recently is that just a few Junk bond funds do offer over 7% yield. I'm back into one of them: PRCPX. My "safe" I.G. bond fund is WCPNX, but it's been volatile--- for a bond fund. Otherwise, I'm riding my portfolio after having just very recently committed some stored-up cash into both stocks and bonds. I suppose I'll be walking a tightrope between preservation and growth until I croak. Heirs are a big consideration. And only one of the two of us here is retired.
  • edited 7:54AM
    Thanks for your input @Old_Joe. I’m hesitant to list funds I own because what’s appropriate for me might be too aggressive or too lame for another. But one I’ve watched for years and finally picked up recently is BAMBX. the “Geritol” of funds. Lewis Braham did a very nice write up on it in Barron’s in November 2020.
  • edited 4:32AM
    Israel apparently does not have the capability to destroy the underground Fordo nuclear facility.
    I wouldn't be surprised if the U.S. strikes this site with bunker-busting bombs.
    An Iran without nuclear weapon capabilities would be a positive development
    but I don't know what the repercussions may be.
    I'm very concerned about increased U.S. involvement in this war.
    I've not made any portfolio changes because my target asset allocation is within range
    and it's unclear how the stock market will react to future developments.
  • edited 9:31AM
    Since the 80s, about 40 years, wars didn't influence the markets short-mid term, why would it happen now?
    The period of 2000-10 SPY lost close to 10% in 10 years, nothing to do with war.
    Several institutions suggest the next 10 year about 5-6% for stocks and 4-5% for bonds, that's great for my style of mostly unique bond funds. I will take 6% for the next 10 years.
  • At Hank. I like the Geritol reference. I doubt the younger cohort here have any idea what Geritol might be.
  • edited 11:48AM
    FD1000 said:

    Since the 80s, about 40 years, wars didn't influence the markets short-mid term, why would it happen now?
    The period of 2000-10 SPY lost close to 10% in 10 years, nothing to do with war.
    Several institutions suggest the next 10 year about 5-6% for stocks and 4-5% for bonds, that's great for my style of mostly unique bond funds. I will take 6% for the next 10 years.

    Just to set the record straight here there was a nearly 20% decline in 1990 during the Gulf War. Regardless I am still in the bull camp based on what occurred on April 9.
  • edited 2:02PM
    @Junkster, +++ !

    Dirty Harry said “the man has to know his limit”
  • edited 2:27PM
    larryB said:

    At Hank. I like the Geritol reference. I doubt the younger cohort here have any idea what Geritol might be.

    Thanks Larry. Geritol was a big sponsor of the Lawerence Welk Show.

    BAMBX appears to be a fund designed for “boomers.” Low risk. Low return. Less stressful than walking around the block, getting dressed or climbing out of bed. But more exiting and potentially profitable than cash. Expensive too!
  • a2z
    edited 3:36PM
    it seems some are on the verge of rotating 180 degrees to historic regurgitation of how war leads to a booming economy.
  • edited 3:33PM
    Junkster said:

    FD1000 said:

    Since the 80s, about 40 years, wars didn't influence the markets short-mid term, why would it happen now?
    The period of 2000-10 SPY lost close to 10% in 10 years, nothing to do with war.
    Several institutions suggest the next 10 year about 5-6% for stocks and 4-5% for bonds, that's great for my style of mostly unique bond funds. I will take 6% for the next 10 years.

    Just to set the record straight here there was a nearly 20% decline in 1990 during the Gulf War. Regardless I am still in the bull camp based on what occurred on April 9.
    It is true that the SP500 went down in 1990, but it was before the war.
    The Gulf War started in Mid-January 1991 and the SP500 went up over 25%.
    Surprisingly, markets are nervous before the actual war but not after the start because there are no more unknowns. It was clear the US would win the war.

    https://schrts.co/TTZMpgVH

    BTW, EIS=Israel ETF is up 5% since the beginning of the war last Friday, June 13.
  • At Hank. Who is Lawrence Welk? A dude who hung out with the Lennon Sisters!!!
  • edited 7:26PM
    FD1000 said:

    Junkster said:

    FD1000 said:

    Since the 80s, about 40 years, wars didn't influence the markets short-mid term, why would it happen now?
    The period of 2000-10 SPY lost close to 10% in 10 years, nothing to do with war.
    Several institutions suggest the next 10 year about 5-6% for stocks and 4-5% for bonds, that's great for my style of mostly unique bond funds. I will take 6% for the next 10 years.

    Just to set the record straight here there was a nearly 20% decline in 1990 during the Gulf War. Regardless I am still in the bull camp based on what occurred on April 9.
    It is true that the SP500 went down in 1990, but it was before the war.
    The Gulf War started in Mid-January 1991 and the SP500 went up over 25%.
    Surprisingly, markets are nervous before the actual war but not after the start because there are no more unknowns. It was clear the US would win the war.

    https://schrts.co/TTZMpgVH

    BTW, EIS=Israel ETF is up 5% since the beginning of the war last Friday, June 13.
    Iraq invaded Kuwait August 2 1990. Oil spiked from $15 to over $40 - hence the reason the S@P declined almost 20%. The day we began dropping bombs on Iraq in January 1991 the market surged and never looked back. How it plays out this time is anyone’s guess. Some are thinking if we enter by bombing the uncertainty will be gone and the market will surge again. Who knows.

    https://www.history.navy.mil/our-collections/art/exhibits/conflicts-and-operations/the-gulf-war-1990-1991--operation-desert-shield--desert-storm-.html

    And BTW. We already mentioned the action of the Israel stock market here the other day

    https://www.mutualfundobserver.com/discuss/discussion/64151/israel-stock-market-closes-at-all-time-highs#latest
  • Definitely not advocating anything here but just thinking aloud...

    It seems to be coming down to the question of the underground centrifuge enrichment installation at Fordow. That might be disabled by the US with the 30,000 lb "bunker buster" bombs. Another option would be some sort of land-based assault operation by Israel.

    Iran might be severely weakened with respect to external operations right now, but isn't it likely that they would be able to make a land-based assault on Fordow so expensive in Israeli casualties as to be unacceptable?

    Unless some other state decides to ally itself militarily with Iran, isn't it just a matter of time until...

    • Israel gradually eliminates virtually all of Iran's long-range offensive capability?

    • Wouldn't that would remove major concern about Iran effectively retaliating against any state assisting Israel?

    • Wouldn't that pretty much allow the US to effectively take out Fordow without much fear of retaliation?

    I do prefer that Iran does not acquire atomic weapon capability, whatever it takes to accomplish that. Their widespread aggressive military conduct over the past twenty or so years, coupled with an inherently fanatic religious/political perspective makes their leaders unacceptably unstable and dangerous.

    I've not seen anything that suggests that the present U.S. administration was an active party or accomplice to Israel's "preemptive" attack on Iran. However I do believe that Netanyahu "played" Trump beautifully, guiding him and the U.S. to this almost inevitable very point.

    I do believe that with the possible exception of Korea, virtually every major military operation that the United States has engaged in after WW2 has been both unnecessary and morally and financially destructive to the United States. We have been financially weakened to the point where we no longer even have adequate reserve capacity to help defend Ukraine against the Russian aggression.

    The last thing that we need is another war. But Iran with atomic weapons? I don't think so.
  • edited 7:47PM
    a2z said:

    it seems some are on the verge of rotating 180 degrees to historic regurgitation of how war leads to a booming economy.

    I’d never advocate war as means to a better economy. I’ve heard the theory advanced somewhere along the way (perhaps from some whacky college prof) and passed it along mostly in tongue-in-cheek fashion in another thread. Wars can lead to many different consequences. The Vietnam war was one of the contributors to the horrific double-digit inflation many of us lived through during the 70s and into the early 80s.
  • "Wouldn't that would remove major concern about Iran effectively retaliating against any state assisting Israel?"

    Almost 100 ships a day traverse the Strait of Hormuz and it's only 20 something miles wide at some points. About 20-25% of the global supply of oil. They could cause significant global turmoil if they want, maybe sink a ship or 3. What would losing 20%+ of the worlds oil supply do? It would also effect them so they might think twice about doing it but if the &*^*( hits the fan you never know.
  • Most of the discussions about the situation that I hear everywhere are based on the presumption that if Iran has nuclear bombs, it will use them, sooner or later, perhaps within a year. I asked Google AI, and here is what I got:

    Using a nuclear weapon would likely be considered suicidal for Iran. Here's why:

    Mutual Assured Destruction (MAD): If Iran were to use a nuclear weapon, it would likely face retaliation from other nuclear powers, such as the United States or Israel, resulting in devastating consequences for Iran.

    Preservation of the regime: The paramount foreign policy goal of the Iranian leadership is the security and survival of the regime itself. Using a nuclear weapon would likely threaten that very survival due to the inevitable response from other nations.

    Avoidance of further isolation: Possession and particularly the use of a nuclear weapon would likely lead to severe international isolation, which Iran seeks to avoid.

    In summary, experts generally believe that Iran's leadership is not irrational or suicidal, and therefore unlikely to initiate a nuclear attack that would result in its own destruction. Their actions are primarily driven by the desire to maintain power and the regime's security.


    In a more detailed reply, AI admitted that there is always a risk of miscalculation.

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