From Panic to Rebound – Today’s Rollercoaster
Iran closes the Strait of Hormuz… global investment markets tank… Luke Lango with three ways this resolves… the action step to take now in your portfolio
As I write on Tuesday afternoon, the market is staging a comeback.
Earlier today, fear gripped Wall Street due to escalating tensions in the Middle East.
All three major indexes were down more than 2% in a classic “sell first, ask questions later” session.
Gold was off 4%… silver had dropped nearly 8%… Bitcoin was lower… and just about everything – apart from oil – was being sold indiscriminately.
It was the kind of move where fear overrides analysis.
The primary driver of that early selloff was the risk we flagged in yesterday’s Digest – the potential closure of the Strait of Hormuz, a critical waterway responsible for roughly 20% of global oil trade.
An official from Iran’s Revolutionary Guards said Iran “will set fire to any ship attempting to pass through the Strait.” That headline sent energy prices higher and traders scrambling.
But just as we’re going to press, a major development hit the wires: President Trump announced the U.S. Navy will escort tankers through the Strait of Hormuz if necessary.
Here’s Trump from Truth Social:
If necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz, as soon as possible.
No matter what, the United States will ensure the FREE FLOW of ENERGY to the WORLD.
That statement directly targets the market’s core fear: a sustained disruption to global oil supply.
The market reaction was swift. As I write near 3:00 p.m. Eastern, the Dow is down just 0.6%, the S&P 500 is off about 0.75%, and the Nasdaq is lower by 0.8%.
This intraday reversal tells us something critical: markets are still watching oil closely – but they are not yet pricing in a sustained, durable energy shock. More on that in a moment.
First, let’s back up and cover today’s events from the beginning. Here’s legendary investor Louis Navellier from his Growth Investor Flash Alert from earlier today:
The Republican Guard [Islamic Revolutionary Guard Corps (IRGC)] has said the Strait of Hormuz is closed now.
And everybody’s looking at alternative shipping routes because the insurance on any ship going through the Strait of Hormuz is cost prohibitive…
You have Brent crude at $84 and WTI (West Texas Intermediate) crude approaching $80.
Global markets also reacted to Iran’s attacks on critical energy infrastructure in the Middle East. Iranian drones and/or ballistic missiles have hit Qatar, Saudi Arabia, the UAE, Kuwait, and Oman.
So, where does this conflict go from here – and what’s the appropriate response in your portfolio?
Three likely outcomes and their respective market impacts
To help us navigate how the Middle East conflict might play out, and what it means for the markets, let’s go to our hypergrowth expert Luke Lango, editor of Innovation Investor.
After assessing military developments, political signaling, market pricing, and prediction markets, Luke sees three potential paths forward.
Path A: Negotiated Resolution
In this possibility, talks between U.S. and Iranian officials prove successful, and we reach a ceasefire within weeks.
The scenario here: apply maximum pressure, force negotiations, declare victory, and step back.
The risk is the permanent closure of the Strait of Hormuz. Here’s Luke:
Even a temporary disruption can send energy prices sharply higher and ripple through inflation and growth forecasts.
But if negotiations and de-escalation are successful, Luke sees the conflict and the market impact resolving soon:
This would be the “nothing burger” scenario for the U.S. economy.
Assuming the Strait of Hormuz is reopened shortly, we’ll likely see the brief oil spike fade.
Markets will recover recent losses within days to weeks.
Path B: Revolutionary Guard Hardliner Consolidation/Prolonged Conflict
Iran’s regime was built to survive leadership decapitation. So, a Revolutionary Guard consolidation around a hardliner could mean publicly announced talks, but regional escalation.
Luke says that this hypothetical could include proxy activation (e.g., Hezbollah), tanker disruptions, and sustained pressure in the Persian Gulf.
Here’s Luke with how that could translate into markets:
Oil at $100 to $140 per barrel, European gas structurally elevated, and the AI trade bifurcates sharply:
- Defense AI – Palantir (PLTR), Booz Allen (BAH) – and cybersecurity AI – CrowdStrike (CRWD), Palo Alto (PANW) – surge.
- Commercial AI infrastructure faces pressure due to the risk of stagflation.
We end up with a meaningful, sustained sector rotation away from growth and toward energy and defense – painful, but not a market collapse.
Path C: State Collapse/Failed State
If orderly succession fails and factions compete for control, then Iran could slide into chaotic fragmentation. This would likely mean regional conflict spillover, nuclear security concerns, and uncontrolled proxy activity.
In that case, Luke says the investment fallout could be severe:
This is the scenario nobody has fully priced…
A genuine nightmare for nearly every asset class except gold (which targets $6,000/ounce-plus), hard assets, and domestic defense.
This is the scenario where oil heads to $150 to $200 per barrel, inflation reheats, the Federal Reserve hikes interest rates, and a genuine U.S. recession emerges.
A quick sidenote since Luke brought up gold…
Why is it selling off today? Isn’t it supposed to be a safe haven for wealth during chaotic markets?
Yes, but there’s an old saying on Wall Street…
In a crisis, correlations go to one.
When fear spikes, investors sell what they can – not just what they should. But that phase rarely lasts.
History shows that once panicked forced selling subsides, gold typically resumes its role as a volatility hedge.
Circling back to Louis, this is why he’s still bullish on the yellow metal:
Now, gold technically is down today, but gold stocks should be very, very resilient.
So, which of the potential outcomes is most likely?
No one knows.
Yesterday, the market was pricing in Path A. This morning’s selloff suggested traders were hedging against Path B.
But this afternoon’s rebound tells us something important: investors are not yet convinced this will become a sustained energy shock.
That doesn’t eliminate Path B or C going forward. But it reinforces the same variable we flagged yesterday…
The Strait of Hormuz and its impact on oil prices.
After all, whether you like it or not, oil remains the lifeblood of the global economy. It powers approximately 33% of global energy consumption, dominates transportation fuel, and is essential for the production of plastics, chemicals, and fertilizers.
So, if oil prices explode higher and remain there, that’s our red flag. And behind that risk is the Strait of Hormuz.
Here’s Luke making the same point:
Limited conflict that doesn’t permanently impair Hormuz transit is not a structural market threat…
Watch energy markets, not just the S&P 500, for the real-time risk barometer…
Goldman Sachs’ (GS) chief strategist put the key question correctly: The stock market’s reaction will hinge “less on headline risk and more on the durability of any energy shock.”
But this afternoon’s news from President Trump directly addresses the market’s core fear – a sustained disruption to global oil supply – and helps explain the sharp intraday rebound.
What to do in your own portfolio
Mornings like this are when investment plans earn their keep.
When markets are calm, it’s easy to talk about discipline. When everything is flashing red and oil is spiking, that discipline gets tested.
So, instead of trying to predict what Iran will do next, along with the ensuing fallout, let’s be wiser and ask a core question…
What kind of stocks do I actually own?
This is where the distinction I’ve highlighted before in the Digest becomes critical…
Do you own high-conviction investments or low-conviction trades?
Step 1: Separate your portfolio into two buckets
High-conviction holdings are your multi-year (or multi-decade) compounders.
You own them because of durable competitive advantages, structural tailwinds, and long-term earnings power.
You’ve already accepted that:
- They will fall in bear markets.
- They could drop 30%–40% at some point.
- But you’d still hold them.
So, your default here is to sail through this volatility. But for this to be the case, they must pass one test today…
Has the Middle East conflict permanently impaired your original thesis?
If the answer is “no,” then a 10%–20% pullback may be far less a threat, and far more an opportunity.
Limited geopolitical conflict does not invalidate long-term secular winners. If your thesis remains intact, lower prices just improve future returns.
So, revisit the reason you bought each of those stocks. If those reasons still stand, today’s volatility alone is not a sell signal.
Step 2: Treat speculations like speculations
Now let’s talk about the other bucket – low-conviction positions.
These are:
- Momentum trades
- Tactical plays
- Shorter-term opportunities
- Smaller positions because you weren’t fully committed
In these names, today’s fear-based price action matters.
If you entered them primarily to capture bullish momentum, and this sudden risk-off behavior has clearly broken that momentum, then conditions have changed.
So, if your stop-loss triggered, there’s no debate – the decision has already been made. After all, protecting capital during falling markets is how you make sure you have dry powder to put to work when confidence returns (along with more buyers).
And to Luke’s point, even though we all want Path A, if we get Path B or C, then many speculative trades will end up falling much lower.
Stepping back, the real danger to your portfolio todayisn’t volatility – it’s blurring the line between speculation and conviction.
Wrapping up
The market was chaotic this morning, but the rebound reminds us how quickly sentiment can shift.
And even if selling pressure returns, Luke’s more severe scenarios point to rotation and repricing – not the end of the investment landscape.
The Strait of Hormuz and oil prices will determine whether this becomes a brief shock or a more prolonged one. So, we’ll be keeping an eye on that with you.
But until there’s greater clarity there, your edge will come from executing your plan – the basic blocking and tackling of investing. That’s how you stay rational when markets aren’t – and how you compound your wealth through chaos.
We’ll keep you updated here in the Digest.
Have a good evening,
Jeff Remsburg
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