Tensions between Iran and Israel are casting a dark shadow over the market, causing what can be seen as a timely retracement in stocks and risky trades. But whenever geopolitics tends to get involved, the first thing that always comes to mind is the saying buy value, sell hysteria.
It’s a story as old as time and it works for almost anything, as long as there’s fear in the image. If a meteor is said to be heading towards Earth and the market crashes, that’s the best time to buy the dip. If there’s a comet predicted to hit Earth and wipe out humanity, you should still buy the plunge. At worst, we will all die together. But by chance, the comet misses its target and we all survive, guess what? The world will continue as before.
Although tensions remain high regarding Iran and Israel, it is likely that at least one side does not want war. I mean, we went through the whole Russia-Ukraine debacle two years ago and I preached the exact same thing here.
But looking at today’s market, things might be a little different. We’ve seen stocks rebound in a rather one-sided fashion since late October. And it’s perhaps as good an excuse as any to get out of the turmoil a little. I mean, this also coincides with more stubborn inflationary pressures.
Over time, the market is always quick to forget and move on. And these days, this is happening faster than ever, given the information echo chamber. So yes, tensions are currently high regarding Iran and Israel. But this is an episode that the market will not care about in a few months, let alone a year.
And that’s what you should be looking at. It’s for buy value, sell hysteria.
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