Transcription
Headlines are screaming at us about the US Iran tensions. And right now, millions of investors are asking the same question. Should I sell everything? And here is what nobody's telling you.
The last several major conflicts, Gulf War, Iraq war, Russia, Ukraine, all followed the exact same pattern. And 99% of retail investors got it completely wrong. They either panic sold or they chase defense stocks and oil companies right at the peak. Both equally unpleasant.
So my promise to you is that by the end of this video you'll understand the three phases markets go through during geopolitical conflict. Not just this conflict but any conflict and where the money actually flows and how to position your portfolio without panic and without gambling on the latest headline.
My name is Felix Pin. I'm an ex-investment banker and economist. That's Winston back there. He's our chief research analyst as the real deep thinking around here. I used to find event-driven opportunities for an investment bank. That's what they call war, you know, human suffering and all that. So, Wall Street, it is an event-driven opportunity. And it taught me the pattern that I'm going to share with you here so you understand it so you can be smart.
I'm also the founder of the Goat Academy where we've taught well over 20,000 students or rather my mentors. I've taught well over 20,000 students. Who are my mentors? They're guys who worked on Wall Street. The guys have worked at Goldman Sachs and Maril Lynch and the big hedge funds. And I'm also the co-founder of tradevision.io where I get all my news and data from.
So our mission here is very simple. Winston and I want to help regular investors understand what Wall Street already knows. So, I'm going to give you the exact framework for understanding how money moves during any geopolitical conflict. Not by predicting whether and where the bombs will fall. That's a mug's game. But by following the big money and no matter what the headlines are today or this week or next week about the US Iran stuff, sanctions, military action, proxy conflicts, the straight of humus, all those things are a little confusing, right?
That fear you're feeling is actually quite rational because war is destabilizing. Conflict is unpredictable and markets genuinely do hate unpredictability. So if you're feeling a little bit nervous, it's not a weakness. It's a pattern recognition. Your brain evolved to identify threats and run away from them. The problem is that instinct gets you destroyed on the stock market because there's a paradox that no one talks about. Historically, markets panic first and then they adapt every single time.
Let me show you what retail investors do versus what the institutions do, the Wall Street guys, because that's where the gap is between making money and losing money. When you and me, which we call retail, sees a conflict heat up, we do typically one of three things. The first thing we do, we move all of our money into cash. and you think you're being safe, but you're actually guaranteeing a loss to inflation. And then number two, what's the second thing we do? Well, we just freeze. We just don't know what to do. So, we don't do anything at all and we stare at the screens in horror. And number three is we chase whatever just spiked. And that could be oil, that could be defense. And usually you're buying it at exactly the wrong time.
Meanwhile, the big boys institutions, the ones with the deep pocket, they're doing something very, very different. They're not doing any of this nonsense. No, institutions reposition based on the patterns that they have understood and have been taught. I'm going to teach you the same thing in the next few minutes, so stick around.
Now, if you're wondering whether I'm going to predict the outcome of the US Iran conflict, no, I don't care. I This is not what this is about. This is about understanding the framework, the patterns that happen to money when there is a conflict like this. And the questions you want to be asking yourself is what happens to oil prices, energy prices, what happens to inflation and therefore interest rates. And what happens to sectors? Because you see the stock market isn't just one great big pile of stocks. No, it is cut into different sectors and the money flows from one sector to the other. What are those sectors? Well, yes, there is things like aerospace and defense, but there is also, you know, energy and there is tech and there is biotech and there are all this these sectors. In fact, there are about 147 industries that make up the stock market. And once you understand how the money flows from one industry to another and how to monitor that, I think you're in a position to make much much better, much much more informed decisions. Is that something you're interested in learning? Yes. Okay. Brilliant.
I've made a mini master class. I took four hours and I squeezed it down to 17 minutes because I know you're all very busy. And you can watch that and it'll literally teach you how the money moves from one industry to the next. And you can watch that at felix.org/getree. Links down below. And my hope is that'll help you to get free. And once you watch that and you put it together with this event-driven scenario, remember that horrible phrasing, then you will be much much better placed in my humble opinion to tackle this conflict and any other conflict.
So where do these patterns come from? Well, we need to look at history. I know history sounds boring, right? It's not boring. It's just teachers made it boring. If you know your history and you understand the pattern, you see what repeats again and again and again. It's way better than watching the news. I don't watch the news, but I watch the money flow. And if we look at the past several decades, look at all the conflicts we had. We had the Gulf Gulf War one and two. We had Afghanistan. What a freaking disaster that was. Can I spell Afghanistan? Of course not. uh we obviously have the Russia Ukraine war and many many others in the Middle East particularly the market reacted almost the same way every single time it's almost identical.
So here's the pattern here's what happens so you get you know war or some sort of conflict that makes people feel like something bad's going to happen and what happens certain stocks go up that's typically defense and energy But the market overall, so the S&P say or the NASDAQ, they typically tank on fears. And then what happens next? Well, the S&P tends to recover, stabilize at least, and that usually happens within 6 to 12 months. Now, that's a long period of time to be sitting on something that's painful.
So, let me give you some actual numbers because I know you don't trust this pattern in me quite yet. According to research on the S&P 500 performance during conflicts, here is what happens. First 10 days, we go down 5 to minus 7%. You go forward 35 days, just slightly over a month. It would take an academic to come up with 35 days rather than just calling it a month, right? Lunatics. Where are we? Flat. And 12 months later, I know a whole boring year, the markets are typically up 8 to 10%. Which coincidentally is what markets do on average every year. Now, no, of course, not every year, but on average.
So, let me give you some actual examples. The Gulf War, the S&P did 11.7% per year during the war. almost exactly what it always well it's done the last 10 years and when it ended which is an interesting piece of information you might want to write this down it delivered 18% in the following 12 months Gulf War II or the Iraq war as it's generally known 2003 there were apparently weapons of mass destruction guess what happened and the Iraq war started took 3 months and what did we get we got a 13.6% 6% increase in the market. It wasn't bad for the market.
Now, what about the Russia Ukraine war? Dragging on for absolute ages. And I'm a cynic on war. It's it's a the profit incentive is usually the biggest thing in my humble opinion. Um, you might have strong feelings about this, but you know, let me know down below in the comments. We always app for strong opinions here. What happened? Well, the S&P dropped initially 7% and then it rebounded higher than pre-invasion within a couple of months. War rarely destroys markets. Yes, uncertainty creates some dips and that creates opportunities for us. The mark doesn't care about our feelings by the way. It cares about pricing and information. Once the uncertainty is reduced, once we know the scope and scale of a conflict, no matter how big, the money starts pouring in.
And I know that sounds very cold, right? We're talking about human conflict in terms of like percentage points and sector rotation, and that's very, very cold. Yes, markets are sociopaths. They have zero emotional intelligence. Understanding that and acting on it doesn't make you a bad person. It just makes you somebody who isn't getting destroyed financially and somebody who looks after their family. Is that something you want to do? Yes. Well, then write write sociopath in the comments. Let's see what the YouTube algorithm does with that one. Or just an S will also do the trick because there is a difference between profiting from war and simply not being hit by it. Wall Street already knows this. They're already positioned. The question is whether you will be right.
Let me mention that again. You want to learn how Wall Street actually picks stocks in this scenario and any other. It's the frameworks that I've been using for years that my Wall Street mentors have been teaching me for years. Phoenix.org/getfree. There's a link down below in the description. You can click on that.
Now, when I see a conflict, I don't bet on the conflict happening or not happening. No strong opinion on that. I bet on the opportunity that is there. So let me walk you through the step by step because it's very very elegant if you understand it once you understand it. Isn't it Winston? Yeah. You want to learn it? If you want to learn it, put a one in the chat and we keep going.
Now what's the first thing we need to understand? The first thing we need to understand is Iran is a major oil producer. 3.3 million barrels per day of oil is sprouting out of the ground there. And any escalation increases a supply risk even if none of the oil facilities are actually hit. There is perceived disruption. So literally perceived doesn't have to have to actually happen. So what happens? Well, people assume well maybe some of this oil will no longer be available. Therefore, there is an assumption of less supply. And what happens if there's less supply out there? Demand stays the same. Well, oil prices go up, right? Not because supply has been cut, but because traders are pricing in the possibility of cuts.
The problem with oil is that it's an input to almost everything else. Transport, manufacturing, shipping, food production. A lot of fertilizers are oil based, heating, cooling, energy costs are embedded in everything. So the chain reaction is this. Higher oil prices means what? Higher inflation. It makes everything more expensive. Higher inflation means what? It means the Fed might keep rates higher. And the Fed, just be very clear, they want to cut rates, right? That's the program. They want to cut rates this year, but if inflation is sticky, they won't be able to. What does that mean? Well, what do higher rates mean? Well, it affects everything from your mortgage to your car loans, but of course also corporate investment because corporate investments are usually made with borrowed money. All those AI data centers they're building, they're borrowing hundreds of billions of dollars to do that. So if it costs just a percentage point more to do that percentage point at 100 billion for a billion dollars that's quite a lot of money. So what does that mean? Well it means one thing. It means lower profits lower cash flow.
Now why do we care about that? Well you might have heard of a little thing called the P ratio. That stands for price if I could spell. Apologies. Price divided by profit. They should call it a PP ratio. would be a lot simpler, but Wall Street thinks they're very smart and they call it earnings profits. So, it's PE for price over earnings, but it's really just price over profits. I tot apologize. My handwriting is terrible. Who thinks my handwriting is terrible and I should type write type in the comments down below. I might actually do that from now on.
What's the Fed going to do? Well, they're going to f play their favorite kind of game. They're going to pretend they're in control. So they're going to delay rate cuts and the market's already priced in the rate cuts. So the market's going to hate it. Absolutely hate it. And that's why the index, the S&P 500 tends to drop.
Now the Iran conflict is particularly important for oil and gas. Why? Well, do you know how much oil and gas comes from the Gulf? Yeah. the Kuwaitis, the Iraqis, the Saudis, also all the natural gas that comes out of places like UAE and Qatar and all these places that's all there and then 25% of all the oil in the world gets shipped through the straight of Hus. So if that gets disrupted through actually Iran shooting at things or its proxies or some sea mines floating around or something um there is a very very immediate supply shock and the market as I said doesn't wait for the actual disruption it prices in the risk of disruption.
So let's make this really actionable for you and this isn't financial advice. I'm not a registered financial adviser. I'm not registered for anything at all. Winston might be you know uh chief sleeping golden retriever. So what are the three phases of a conflict and how does this help you to position yourself? Well, you have phase one and it is shock. Not shock and all. Allah George W, but just shock immediate reaction. It's fast. It's violence driven by emotions and algorithms. So what do you see? Usually oil goes up quite dramatically. the VIX, which is the fear index, and that's the one thing that I would keep a bit of an eye on. I always do. Generally speaking, a VIX below 20, so less than 20 is good. Above 20, not so good. And it can go really, really high. 50, 60, 80. In theory, there's no cap to this thing. Tells you how much fear there is on the market. Why is that important? because it tells you exactly how much insurance crash insurance Wall Street buys. That's essentially what the VIX is. So when that happens, your risk stocks drop. What are risk stocks? It's your biotech stocks, your high growth stocks, the stuff, the quantum computing, all that kind of stuff drops because people are like, I'm going to move my money into somewhere safer. Now, at the same time, good old shiny gold tends to also go up. Why? It's a classic flight to safety. You will also see CNBC going into full breaking news mode, trying to freak the f out of everybody. And that's about 23 hours a day. And that's the first phase. This can be a couple of days, sometimes a couple of weeks even. And the key insight is not to time this market. If you do buy here oil, you do buy gold at these moments, you do buy defense stocks at these moments, you're probably buying high and you're going to sell low every single time. That's what all the research shows. So don't do it. Don't be tempted. Right?
Phase two, this is the smarter phase. What do I mean by that? It's the repricing phase where the market panic subsides and money starts thinking about, well, what happens here next? Is this temporary? Is this structural? Is inflation going to stay high for a long period of time? So, the thoughts here are inflation. What's the Fed going to do with interest rates? What about the deficit? Is the US going to have to spend a lot more money on ammunition? We talked about oil. So, is the supply disruption? Are there other things that are getting disrupted? Because usually stuff gets shipped through this part of the world. This is where the repositioning starts from institutions. And what I learned from my Wall Street mentors, actually guys who worked in these big banks for decades, this is where they make their money. Not in the chaos of the first few days, but in the clarity that follows. And that leads us very very nicely into phase number three.
What is number three? This is the actual rotation phase. And that's pretty much all we do. We follow the money. Maybe you follow the rotation and it'll leave some losers and it'll create some winners. Now, rather than buying oil or gold in that moment when it's already spiked, the companies that are going to benefit from this the most with the lowest risk in my humble opinion are the shovels. So, think energy service companies and infrastructure. So, think things like pipeline companies, think storage terminals. They're all going to be more profitable. Unless, of course, they're based on Iran, but it's very unlikely you own Iranian stocks. And with the defense contractors, you need to look at it and think, at least this is my opinion, does it create a shift in long-term spending? Does it accelerate the move towards unmanned AI? Think Palunteer. Think all the guys building drones. And then yes, I did say don't rush into gold at the peak. But yeah, we do want to look at gold commodities, real hard assets. Why? It's as a result of inflation. If we see this conflict lasting longer and therefore oil is removed from the market, inflation will stay higher for longer. Or if all the ships have to travel all their way around Africa to get to Europe, all the stuff that gets shipped from Asia into Europe gets shipped through the Red Sea, right, which is right in the middle of that conflict. That'll increase inflation. But you can also, and this is what I keep saying about inflation, you can own stocks, but you want to own stocks with what? With what? What do you think it is? Put it down below in the chats. Don't cheat. Put it in the comments. With pricing power, companies that can pass their costs on to consumers. But there are also sectors that get pummeled. Utilities get pummeled. You might want to write this down. It isn't really that logical, is it? But it does. Real estate typically gets pummeled. fear of higher rates for longer and this phase can last several quarters sometimes even longer and that's why the patience comes in.
The number one mistake I see in everyone's portfolios and I've looked at thousands and thousands of portfolios is they try to time it perfectly. You can never try to time well you can try but you'll fail. But what you can do is tilt your portfolio towards the sectors that are benefiting where the money is already flowing in before the headlines catch up. Because by the time CNBC is talking about pipeline companies and oil service companies, well, it's definitely too late. And you want to understand that on a more technical level, go to felix.org/getfree links down below and watch that. But I want to be very, very clear. We do not bet on war. We tilt towards probability of outcome. A tilt isn't going all in on defense or drones or whatever. It is adjusting based on where the money is flowing. So it's not gambling, it is positioning. So I would, this is me, you have to obviously come to your own conclusions. I keep my core stock portfolio, but I look through it and I check which of these are most vulnerable to this and what am I missing where I can see the money flowing into it and what do I want to have exposure to there. So your job isn't to blow up your portfolio. Keep your core core stocks and those should be stocks with good pricing power. You know, good brands, companies with high gross margins. If you don't know what companies have high gross margins, we actually have a tool for this. It's called stock intelligence. um, there's a link down below and there's a stock screen up. You can click on that. You can open that and you can literally click on high quality. Comes up 76 stocks right now. And some of these might be familiar, but some of these may not be. And it tells you this thing here, gross margin. And those are the kind of businesses that I'd want to be in. And say you want to know more about IDEX Laboratories for example, or you want to compare that say, you can type in IDXX here. You can add another one. Should do something about the contrast, shouldn't we? AAPL. um, and you can hit analyze. And then you see what's the difference between these two and which one might be a better better better play. If you want to keep a breast of the gold and silver market, well, click on the metals intel tab and not only does it give you the price points, but it tells you the gold silver ratio. It tells you the actual COMX inventory as we have it. And I hit the refresh button on this as I record it because this should be a nice beautiful uh line chart going down. It should looking should look something like that. um, I'll fix that straight after this video. That's why, you know, I'm recording this without overly editing it. That's what we're looking for. Okay, we want to understand those two things. We want to understand how money supply and gold is impacted by this. Inflation and gold is impacted by this. And this is kind of where we know we keep track of that. That's all part of our stock intel community. It's I think it's $6 a week or something like that. $27 a month. You can try it out. You can cancel at any time. No, no uh questions asked. Very easy to access.
So, what's our first move? It's typically getting more access to energy stocks. And I don't mean necessarily the oil. I mean the companies benefiting from higher oil prices, the storage guys and so on. Oil and energy. According to the bots of Bank of America, over all the geopolitical shocks, all the wars, all the conflicts in the last 90 years, oil was the best performing asset. Went up 18% on average. Again, it's not a promise that it's going to do that in the future, but that's what it does. Now, there is a bat that comes with that, and it isn't a very pretty bat. It's an unpleasant bat. Six months into this, this typically disappears. Oil comes back down. So, you want to make sure you have an exit strategy before you get into one of these things. So, the traders will trade the oil energy thing. Long-term investors will own companies with sustained pricing power. Don't bother with the short-term thing if that isn't your stuff.
And then next, number two, is energy infrastructure. The shovels, it's not going to move as much. pipeline, storage facilities, transportation, you know, the sort of guys who collect a toll essentially on on oil moving about.
And number three is good old war stocks, defense stocks, right? So yes, they've already run up. Some of the names are up 34% just since, you know, war tensions are sort of around there. But defense spending is about multi-year procurement cycles. Governments don't pip on missile. They signed like 10-year contracts and the major contractors have backlogs measured in hundreds of billions of dollars, years of guaranteed revenue. So, yeah, the short-term spike is is interesting, but there is a structural case for defense spending and defense stocks. Now, I wouldn't be in one single stock because government contracts can be fairly fickle as you don't want to be holding just that one contractor that gets, you know, shamed on social media by the president or something. You want to be spread out a little bit.
Four, this is gold and yes, silver, the shiny metal stuff. What makes gold go up? Higher inflation, generally fear in the world. And that's literally where we are right now. Right. So according to Bank of America's analysis, 6 months after a shock, gold continues to outperform by, wait for it, 19% on average. Past performance doesn't guarantee your future performance. That's what Bank of America told me. You see, while oil goes up and down, gold tends to stay elevated. So, the key insight from Bank of America's researchers trade oil and gold or maybe just in gold. It's really up to you. So, oil is the short-term play. Gold is the longer term positioning. And if you've been watching my channel a little bit, you know a lot about central banks buying gold and and all that kind of stuff because when you're printing money, well, you got more money to buy gold with. Whenever gold prices go up, it's actually fairly simple.
But I also want to be very clear. We're not going 100% into energy or oil stocks. Yes, it benefits, but we're doing we have position sizing rules, right? We're also not panic selling everything we own. We don't watch CNBC or CNN. We don't watch any war coverage. None. Zero. You don't want to see people dying, things getting blown up. Why not? It messes with your head. It stops you from making informed, calm decisions. Don't watch it. You know what's going on with the war. Someone's going to tell you about it. You're going to see a headline. That's all you need to know. It's misery. Generally speaking, I don't read any war news whatsoever. I don't own a television. I haven't in 20 years. I don't intend to. And maybe you're thinking, Felix, well, how can you how can you be investing and trading? You don't know what the news are. All the news I need is in the stock market because I can see where the money is moving. That's all I need to know. Knowing exactly what they blew up and where and when. It's got bugger all to do with what I actually do because smart investing isn't dramatic. There is no sort of, you know, chest beating here. There's no allin. It isn't the trade of the decade. It is structure. It is patterns. It is rules. And the guys who've been doing this for decades, they're not making these big aggressive bets. This isn't a TV show. This is your livelihood. This is your retirement. This is the financial safety of you and your family. So you want to make measured, controlled moves where you know exactly what the downside is. So the most important thing I could say to you is get your risk management right and you'll make money. It's the least sexy thing I could possibly say. I totally get that. But that's actually what it's all about.
So if you want to take this seriously, if you may be feeling a little bit iffy about it or maybe a little bit motivated by this to actually benefit from it, um then learn the rules. There are three rules. You can watch them for free. You can learn them for free. free. You go to phoenix.org.org/getfree. If you're going to do that, write learn in the chat and it might inspire one or two other folks to also take action. And Winston back there has a final message for us, doesn't he? Now, have you got any um final insider strategies on what to do in this market and with geopolitical tensions generally speaking? I'm not sure he's willing to share that with us. Stay calm, stay collected, make smart decisions, don't chase the FOMO, stop watching the news. honestly is the best thing you can do for your sanity. And if you got some value out of this video, make sure you watch the training video down below and share it with a friend or even a golden retriever. We wish you great success.