Okay – I know that all I have been talking a LOT about Iran recently.
But as I keep saying, in my view this is the most consequential geopolitical event since COVID itself.
There is a good chance that the world post Iran war could be fundamentally different
For the simple reason that if Iran succeeds in holding onto the Strait of Hormuz, and Trump eventually walks away, the US will be judged to have “lost” this war.
With massive consequences for US supremacy.
As Ray Dalio succinctly put it, that could be the US’s version of the Suez crisis – the singular event where the world woke up and realised the British empire was over.
Whereas if Trump succeeds in reopening the Strait of Hormuz and getting Iran to give up nuclear ambitions by military force.
Then US supremacy is restored, and it’s back to Pax Americana.
So all that is playing out in the background, while the world economy is being held hostage by the Strait of Hormuz through which 20% of global energy flows.
Stocks had a very ugly week, so I wanted to take time out to share latest views – Is a stock market crash coming?
Will I buy the dip or sell stocks with the Iran war?
Trump TACO-ed over the weekend, and then some more
The man who started it all – has been at it all week.
After close of markets last Friday, Trump effectively gave Iran an ultimatum.
Surrender in 48 hours, or the USA bombs Iranian power plants.
Back then I shared with FH Premium readers that this was a terrible move from Trump.
Put yourself in the Iranian shoes, and think what is the probability that you give in to an ultimatum like that from a mad man?
But perhaps this was planned so that Trump could walk it back and lead to a huge stock market rally – exactly what we saw on Monday before markets opened.
Trump originally extended the deadline for 5 days.
But as of Friday morning this has been extended for another 10 days… which is typical Trump.
BUT – Stocks are not buying it
For what it’s worth – stocks are not buying it.
The S&P500 closed at it’s lowest since this war started – back at Sep 2025 prices.
And despite all the jaw-boning from Trump, Oil is bouncing around $100.
Bitcoin sits close to cycle lows at 68k.
Gold has been decimated by a combination of the stronger USD, higher interest rates, and investor liquidation – down almost 20% from the top.
Closer to home, the S-REIT index is down almost 10% since the start of the year.
Which considering this is a yield play, is a very meaningful drop.
This is not April 2025 – Trump cannot TACO a war
In my view – this is a very different situation from April 2025.
In April 2025, Trump tweeted an end to the tariffs, and that marked the market bottom.
That’s not happening today.
For the simple reason that unlike unilateral tariffs, this is war.
And for a war to end, you need not only US to put down its weapons – but also Iran, and Israel.
And Iran of course does not believe a single word Trump says anymore.
And Israel of course does not want Trump to end this war so quickly, so they will do what it takes to keep the US stuck in the fight (even if it means bombing Iranian power plants and forcing Iran to retaliate).
And then we have Russia.
US has been sending just enough weapons to Ukraine for the past 4 years to ensure Ukraine can keep up the fight against Russia.
You bet that Putin is rubbing his hands in glee to return the favour.
I shared this right back when the war started, that this could get really ugly and turn into Trump’s Ukraine.
And worryingly, a lot of signs are pointing in that direction.
I still think that Trump is a businessman at heart and he knows without a doubt that this is a mistake, and he is doing whatever he can to end this war.
My fear is that at a certain point this war, with all the dynamics above, will take on a life of its own.
And prevent an effective Trump TACO.
Trump may want to stop, but Israel wants to fight, Iran wants to fight, and Russia (maybe China) are more than happy to supply Iran the weapons.
There are a lot of troops heading to the Middle East
What makes things a LOT more volatile.
Is that there are a lot of US ground troops headed to the Middle East, including:
- 31st Marine Expeditionary Unit (MEU): Estimated 2,200 to 2,500 Marines.
- 11th Marine Expeditionary Unit (MEU): Estimated 2,200 to 2,500 Marines.
- 82nd Airborne Division (US Army): Estimated 3,000 troops.
Combined, this represents a total of 7,400 to 8,000 US troops heading to the region.
In some ways this reminds me of February 2026, when I shared that boy the US sure is massing a lot of logistics assets in the Middle East.
If Trump were purely posturing, you wouldn’t need this much logistical assets – suggesting the US is seriously preparing for war.
That turned out to be absolutely the right call.
The sending of 8000 US Marines, Airborne and Special Forces to the Middle East suggests to me the same.
You don’t send this amount of troops to the Middle East unless you are serious about using them.
At the same time, 8000 troops is nowhere near enough to invade Iran, which means the US is seriously considering some kind of limited ground operations, but not a full blown invasion.
Whatever the case, sending ground troops into this situation is going to make a volatile situation 10x worse.
I shared in last week’s article that if Trump really sends in US boots on the ground, that would be a massive mistake, Ray Dalio’s end of empire kind of stuff.
And I stand by that view.
If Trump sends in US troops – then US soldiers will die, Iran will see a foreign invader on their home ground, and then this could really turn into the US’s Ukraine.
If Trump thinks sending US troops in will end this war quickly, I see the exact opposite.
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It’s all going to come down to Iran
If you ask me, it’s all going to come down to Iran now.
Trump with his mad man tweets this week has made it blatantly clear he wants to TACO.
He just needs Iran to play ball and make it not look like a complete loss of face for him – and I think Trump will take the deal.
So we need to look at it from the Iranian point of view.
I came across this chart this week that perfectly encapsulates the logical best course of action for Iran here.
They want to close the Strait of Hormuz and cause as much pain to the global economy as possible to extract maximum leverage.
But not overplay their hands that this causes a global recession, and the US decides to throw in the tower and wipe out Iran’s entire civilian and oil infrastructure.
So between here and R, is the game theory answer of where Iran “should” strike a deal for maximum leverage.
Also to Iran’s benefit.
Is that after the attacks on Qatar’s LNG plant.
Iran looks to have established the concept of Mutually Assured Destruction (MAD).
In other words – you bomb Iranian oil or power plants, they bomb Saudi or Qatari oil and power plants, 10x worse.
This has the potential to establish a precarious peace based on the nuclear deterrence concept and lead to a peace deal.
Gun to my head, I think that US and Iran should still be able to find an off-ramp in the next 3 – 6 weeks, and that cooler heads will prevail.
But notice that I say *should*.
Because am I 100% certain on this – absolutely not.
Is it possible that Iran decides to go down all guns blazing and takes the entire Middle East down with it?
Absolutely.
This is war, the US assassinated their Supreme Leader, and is now threatening to send in ground troops. In a war orchestrated by Israel.
Don’t be foolish to rule out the tail risks.
Is a stock market crash coming?
If you ask me, this question is slightly deceptive.
Because under the surface – the crash is already here
Bitcoin is down close to 50% from highs:
Sea Limited is down 60%:
Microsoft is down 35%:
Ascendas REIT is down 15%:
So look under the surface, and there are a lot of great buys out there.
If we get a peace deal, this could spark a massive rally.
Of course, stocks can continue to drop further.
But by all intents and purposes, stocks have already dropped, and the crash is already here.
I see no need to buy the bottom perfectly, and this time is no different.
Will I buy the dip or sell stocks with the Iran war?
What is perhaps the better question – is that would I buy the dip, or would I sell stocks.
Gun to my head, I think cooler heads prevail, and both parties find an offramp in the next 3 – 6 weeks.
But can I rule out a US limited ground invasion, and an Iran that decides to go down guns blazing?
Absolutely not.
This is classic macro investing 101.
You have 2 potential outcomes of varying probabilities, of which only 1 will happen.
How much do you make when you are right, vs how much do you lose when you are wrong.
I shared my more detailed gameplan on FH Premium earlier in the week so do sign up if you are keen.
Big picture, what I would say is this.
A peace deal can be struck any time, so as an investor to say that you sell all your positions today may not make sense.
But this situation can absolutely get worse before it gets better. So if you look at your portfolio today and think that another 10% drop makes you absolutely sick to your stomach, then perhaps you’re taking too much risk.
Personally I have a level of exposure to the markets that I am comfortable with even if the decline continues, and I also have enough dry powder on the side.
I have been deploying my dry powder opportunistically into high quality names that I like, and I will continue to do so going forward. You can see my full personal portfolio and my stock watch on FH Premium.
This is an FH Premium article that I am releasing to all readers, in the hopes that it helps you in your decision making. It will not be updated going forward.
My latest macro views, as well as my full stock watch and personal portfolio, are shared on FH Premium.