To The Moon

Geopolitical shocks send tremors through global markets, but one pattern remains unshaken: U.S. equities consistently emerge stronger from crises. As tensions escalate in the Middle East following recent airstrikes, investors face a critical choice – flee to safety or double down on opportunity. History suggests the latter approach wins, especially when betting on American markets.

The Resilience Playbook: How U.S. Markets Defy Geopolitics

1. Crisis Performance That Speaks Volumes

• 9/11 Attacks (2001): S&P 500 dropped 12% in a week, but fully recovered in 33 days $SPDR S&P 500 ETF Trust(SPY)$

• Iraq Invasion (2003): Markets rose 15% in the 6 months following the invasion

• Russia-Ukraine War (2022): S&P gained 5% in the 3 months post-invasion

2. The Military-Industrial Complex Advantage U.S. defense stocks historically outperform during conflicts:

• Lockheed Martin (LMT): Average 18% returns in conflict years $Lockheed Martin(LMT)$

• Northrop Grumman (NOC): 22% dividend growth since 2022 $Northrop Grumman(NOC)$

• RTX Corporation (RTX): Order backlog at record $196B $RTX Corp(RTX)$

3. Dollar Dominance in Turbulent Times

• USD appreciates 5-7% on average during geopolitical crises (BofA data)

• U.S. Treasury markets absorb 90% of global safe-haven flows

The Dip-Buying Manual for Crisis Investing

1. Defense & Aerospace (The Obvious Play)

• General Dynamics (GD): Trading at 16x earnings with 12% EPS growth

• Leidos Holdings (LDOS): Cybersecurity demand surge post-strikes

2. Energy (The Geopolitical Hedge)

• Exxon (XOM): $38/share in cash reserves for acquisitions

• Schlumberger (SLB): Middle East contracts = 28% of revenue

3. Tech Resilience Plays

• Palo Alto Networks (PANW): Critical infrastructure protection

• Anduril Industries (Private): Next-gen defense AI (watch for IPO)

4. Contrarian Opportunities

• Boeing (BA): Oversold on MAX woes, but defense unit remains strong

• Tel Aviv Stock Exchange (TASE: TASE): Potential rebound if de-escalation occurs

The Historical Roadmap: What Comes Next

Examining past Middle East conflicts reveals a predictable sequence:

1. Initial Shock (Days 1-5):

   Oil spikes 15-20%

   Defense stocks rally 8-10%

   Airlines drop 12-15%

2. Stabilization Phase (Weeks 2-6):

   Tech rebounds fastest (avg. +9%)

   Gold gives back half its gains

3. New Normal (3+ Months Out):

   S&P 500 averages 7% higher.

   Small caps (IWM) outperform by 3-5%

The Risks No One Talks About

1. Escalation Scenario:

   Iran directly enters conflict → Oil at $150+

   Play: Long energy (XLE), short consumer discretionary (XLY)

2. Cyber Warfare Fallout:

   Critical infrastructure attacks.

   Play: CrowdStrike (CRWD), Zscaler (ZS)

3. Political Uncertainty:

   U.S. election volatility overlaps.

   Play: VIX calls as hedge

The Buffett Blueprint: What Would Warren Do?

The Oracle's playbook for crisis investing:

✔ Focus on quality (AAPL, BAC, KO)

✔ Buy fear (see 2008 Goldman Sachs deal)

✔ Ignore short-term noise ("We don't bet on geopolitics")

Current Berkshire holdings perfectly positioned:

• Occidental (OXY): Oil hedge at $60 breakeven

• Apple (AAPL): $73B in cash to weather storms

• HP Inc (HPQ): Undervalued defense contractor supplier

The Bottom Line: America Still Wins

While Israeli stocks may see tactical bounces, U.S. markets offer:

✓ Unmatched liquidity

✓ Sector diversity

✓ Currency stability

✓ Technological edge

For long-term investors, geopolitical shocks remain buying opportunities – provided you stick with the market that's survived 11 recessions, 3 pandemics, and countless conflicts. The numbers don't lie: America Inc. always finds a way to win.

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