Geopolitical risks are rising

The situation in the Middle East is becoming more problematic by the week. There is no reason to panic, but a few well-chosen portfolio hedges may make sense.

Everybody knows that the Middle East is a powder keg, but few in the financial market seem to be taking appropriate precautionary action.

Perhaps that is because the region where the missiles and bombs are landing is nowhere near Wall Street, the City of London, Tokyo, Sydney, or Hong Kong.

The conflicts of our time are coming at hypersonic speed. Source: Wikimedia.

I don’t wish to get into a he said, she said, he did, she did, debate on causes.

This decade began with populist politicians wagging their fingers and shouting their escalatory words with their mouths set to stun.

With the Ukraine-Russia war well into the third year, and the conflict in the Middle East now escalating, it seems prudent to step back from fanning the flames.

The best form of insurance policy in life is the one you never cash.

No sane individual would like to see a war between great powers.

However, we should at least consider the possibility that the present conflicts grow worse, and that trade may be disrupted. There are hiccups and earthquakes.

In this short stack, I offer no great new insight on hedges for conflict.

There are defensive stocks like healthcare, commodities like gold and oil, offensive stocks like weapons manufacturers, and sundry other exposures that make sense.

I will simply point out some of the more obvious hedging options.