Suffice to say that if markets hate uncertainty, while the year-to-date action in equities has indeed been negative, it could be a whole lot worse... Which of course is a distinct probability should present geopolitical conditions become a protracted affair.
Here's the succinct take on current events and our core allocation this morning generated by PWAI, our proprietary analytical engine:
Markets are under pressure today as the conflict in the Middle East escalated overnight, with Iran striking energy infrastructure in Saudi Arabia — a development that moves this situation from a regional concern into a broader risk for global supply chains and economic growth. Against that backdrop, the portfolio is holding up well: we are down less than six-tenths of one percent on the day, a result that reflects deliberate construction rather than luck. Our energy and infrastructure positions — including natural gas, energy pipelines, and the broad energy sector — are among the strongest performers in the market today, doing exactly what they were built to do. Equally important, the protective options we hold specifically for environments like this are up over twenty percent on the day, actively generating gains that are cushioning the broader market decline. Gold continues to act as a stabilizing anchor, and our significant cash reserve remains ready to be deployed when the opportunity set improves.
Per the above, our core allocation is holding up well, relative to equity markets, as it has consistently over the past year+. Which, again, speaks to our broad diversification, cash position and hedging strategies.
While we will continue to manage positioning actively as conditions evolve, it's times like these when prudence demands that -- as markets quiver -- we remain calm, non-reactionary (given our present positioning) and diligent/disciplined as the world meanders through the current crisis.
Stay tuned...
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