I’m undertaking a 1000-day reinvention project, blogging here daily to track my progress. In Sunday Planning, I plan for the week ahead.
Tomorrow is my monthly portfolio buy/sell day, although as a reckless investor I’m willing to buy and sell on any day of the month. Over the weekend, Israel and the U.S. began bombing Iran and took out its leader Khameini, apparently killing many others in senior leadership as well.
Geopolitical shocks often see a big selloff before things stabilize so it could be a good time to scoop up some ETF shares for cheap. But if this war turns into some sort of quagmire, it could mean grinding losses ahead.
Here’s a table Gemini provided for me of how the S&P 500 index has reacted after the start of other conflicts in the Middle East.
| Event | Initial Reaction (Short Term) | One Year Later |
| 1973 Yom Kippur War/Embargo | -17.1% (Total Drawdown) | -34% (due to oil/recession) |
| 1990 Iraq Invades Kuwait | -16.9% (Total Drawdown) | +13.7% |
| 2003 U.S. Invades Iraq | -2.0% (One day) | +33.5% |
| 2020 Killing of Qasem Soleimani | -0.7% (One day) | +16.3% |
| 2022 Russia Invades Ukraine | -2.0% (One day) | -7.3% (Inflation-driven) |
History shows that markets recover quickly from war absent a global supply shock. The 1973 embargo led to a prlonged bear market as oil prices quadrupled. Iran has explicitly mentioned closing the Strait of Hormuz where 20% of global oil flows, so there could be supply shocks.
I’ve made the mistake of thinking that chaos sown by the current presidential administration will last longer than it actually does. My gut says this is going to turn into a ground war with oil shipping disruptions. But experience says I must consider that Trump may quickly declare victory and withdraw from the air campaign, leaving a reconstruction of Iran’s government to the Iranian people (or, more likely, to those who retain power even after the bombings).
I suspect that financial market outcomes over the next twelve- to eighteen-months will depend on factors other than what happens with the U.S., Israel, and Iran. Note in the table that in 2022, the S&P 500 was down 7.3% a year after the Russian invasion of Ukraine. But that was because the Fed was raising interest rates, not really because of war.
So I will plan to buy and sell based on trend indicators and based on my own intuition about what I think will do well in the next year or so. I’ve already leaned away from U.S. equities. I’m leaning towards commodities, especially precious metals and metal miners, and towards non-U.S. stocks.
I don’t think that anyone can predict the macroeconomic future even in the short run. Will inflation rise, cool, or stay flat? Will the Trump administration increase the deficit with spending designed to win the midterm elections, and thus drive more inflation? Will slowing growth instead lead to deflation and bond outperformance? Who knows.
Maybe best to just rely on trends right now. Buy what’s working and hold or sell what’s not.
And in other plans
I’ve created a weekly routine aimed at getting paintings uploaded to Saatchi Art for sale:
- Monday – Finish edges, glaze, sign, and wire one or more paintings
- Tuesday – Photograph paintings – standard, close-up for texture and color, side view
- Wednesday – Transfer photos from camera to hard drive, process and clean up, create composite room photos
- Thursday – Enter painting details into my inventory spreadsheet, write description, calculate price, decide on framing (if any), finalize title
- Friday – Enter painting images and details into Saatchi
So I’ll be doing that for three paintings this week.
I’m also planning to ski at least one day and write and publish at least one newsletter article.
Insomnia and bupropion
Another task I have is to solve my insomnia problem. I started taking bupropion XL 150mg each day to help with overeating and overdrinking about six weeks ago. It’s worked really well — I’ve lost ten pounds and quit daily drinking. But I am waking up in the middle of each night and staying awake for a couple hours. Not what I expected when I cut out the wine!
I suspect that I just need less sleep now than before I started the medication so I am going to gradually move my bedtime later. Instead of filling that time with television, I’m going to add an evening art practice routine, where I develop my drawing and painting skills by working on exercises rather than on actual artworks.
I’m also going to get some extended release melatonin to take at bedtime that I hope will get me through the middle of the night without waking up.
And some gardening
Winter might be done here in Colorado, sadly. Happily, that means spring flowers are on the way. This week, I’ll do some garden bed cleanup and water my lawn and plants. I could probably get my sprinkler turn on scheduled too.
Have a great week! 🌹