Iran War Escalation: Market Impact and What Investors Should Do

Today we covered the topic of US Iran Israel war because I think everyone is worried about this right you can see that the war after it started for one week or so market is already getting quite volatile we'll look at those uh

market reactions and I think many people they are worried what is the impact what's the implication for my portfolio what what should I do about it so we'll cover that also uh later so let's get through the slidesh on February 28 US

and Israel launched a large scale offensive against Iran after weeks of military buildout and threats from President Trump. Trump said the goal of

President Trump. Trump said the goal of the operation is to prevent Iran from obtaining a nuclear weapon and to defend the American people by eliminating imminent threats from the Iranian regime. Trump and Israeli officials

regime. Trump and Israeli officials later confirmed that Israel defense force IDF strikes on the tean killed Iranian Supreme Leader Ayatollah Ali Kamayi. Then additional US strikes

Kamayi. Then additional US strikes targeted military sites in Isvahan, Karach, Kman Sha, Kum and Tabris. Iran

quickly retaliated by firing ballistic missiles at Israel and US facility across the Middle East including Bahrain, Kuwait, Katal and UAE. So it's

like at one go Iran really shoot like multiple countries, right? All all the neighboring countries almost all of them affected. So these are the sites that

affected. So these are the sites that was attacked by Israel and also US. So

it's not just one place there are multiple places within the country that get hit. So including their city tan all

get hit. So including their city tan all this kind of then if you look at the map right actually quite interesting part is that of course US is involved here but I think the key player here is still Israel right. So basically US and Israel

Israel right. So basically US and Israel they team together and they are striking Iran. But if you look at the map right

Iran. But if you look at the map right yes Iran is very big and then if you look at the countries between Iran and Israel you you will see countries like Saudi Arabia right. Saudi Arabia I think they are they sight on the US they are

same team as the US but actually within their countries right there are quite a number of all these Iran back militias meaning that Iran right they fund all these military groups they provide training all these like Hezbollah from

US side they just call them terrorist but from Iran side they they actually funding all these groups and all these groups they are the one that attack Israel but now it's no longer just proxy within all these uh terrorist terrorist

group but it's really direct war between Israel and Iran and also with the backing of US so US also will strike Iran. Now look at the market reaction so

Iran. Now look at the market reaction so far, right? Because I think the war

far, right? Because I think the war started Saturday 28th of February. So

now it's like seven or 8 day already.

You see one week of market reaction here, right? So let's look at S&P 500

here, right? So let's look at S&P 500 first. Uh the draw down is less than 4%

first. Uh the draw down is less than 4% so far. And if you just count from the

so far. And if you just count from the starting of the war until now, actually it's even less than 4%, right? So I

think S&P 500 is surprisingly quite resilient. So nobody panic at this

resilient. So nobody panic at this moment. But we don't know, right?

moment. But we don't know, right?

Because now we are only at week one.

There's still many weeks to go. We still

have to see how progress. But if you zoom out right, you can see that yes, we are still quite stable. It's only like 4% less than 4% draw down. If you follow Mr. Lou, the first trigger of crash buying is 10% draw down, right? So I

draw the line here. You can see that we still some distance away from that 10%.

You need 6%. But sometimes all these things is hard to say when you you only need like one event suddenly market can just drop by 6% in one day, right? So

all this definitely could happen. I'm

not predicting whether it will happen or not, right? Just bear in mind that the

not, right? Just bear in mind that the kind of like low volatility that we have seen since last year and this year right sometimes let's say one big event happen then please expect some big draw down that could happen that's why we need to

monitor the situation but please don't overreact don't panic then if you look at QQQ yes draw down is larger it's about 6% so as usual QQQ they have more tech company exposure so volatility also

tend to be higher and also it's more concentrated it's only like 100 companies inside QQQ so that's why is more volatile but 6% I will still make the same remark which is that is still quite resilient. If you look at 30-year

quite resilient. If you look at 30-year US 30-year bonds, right? Okay, this is the one. If you invest in TLT, you'll be

the one. If you invest in TLT, you'll be interested to look at the 30-year meaning the US long interest rate, right? Long tener. So, since end of

right? Long tener. So, since end of February, right, since the start of the war until now, right, it only widened by 14 basis point. Actually, the first day Monday, right, the interest rate dropped because of flight to safety. Then after

that, people they're getting worried about whether this will leads to higher inflations. So, if inflation is getting

inflations. So, if inflation is getting higher, yeah, US 30 years rate, they will go up because now you need to compensate for the term premium. So

that's why this is the reactions but 14 basis point is still quite mild in a sense. If you zoom out on the 30-year

sense. If you zoom out on the 30-year rates you can see that they actually trading within a band right and within this band let's say it is still anchored within the band then I think we are fine. If suddenly something bad happen

fine. If suddenly something bad happen escalate to a much serious situations right let's say it exceed the the band say for example 5.5% right then this will get really scary because it will really you know unanch anchor and then

you can go much higher from there right that's the scenario when people really worried about hyperinflations okay the next one is brand crude oil people are watching this because let's say if the energy prices go up too much right then

inflation will become higher higher inflations meaning that US fat they have to keep the interest rate high and if that happen that is bad for equities these valuations. So people also

these valuations. So people also watching this in uh quite closely and just within one week right the brand crude oil went from $73 to $93. So

that's quite a huge increase, right?

$93. People are not worried about this 93. They are worried whether it will go

93. They are worried whether it will go to 120, 150 because let's say if the supply of the oil really restricted because of war, right? 150 even $200 also possible. So it really depends on

also possible. So it really depends on whether all this oil production will continue, whether the shipment of all this oil can continue. These are the uncertainty. That's why the oil price

uncertainty. That's why the oil price just went straight up first. Go up first then talk later. Next one. Uh the funny thing is that I observed the stock market around the world, right? The one

that reacted really a bit like out of expectation is Cosby index. This is a South Korea equity index. Within 2 days, right, it drops by close to 20%. Then

after that, Thursday and Friday, of course, it recovers slightly. But within

I mean South Korea, they are not in direct conflict with this Israel Iran war, right? But the volatility for the

war, right? But the volatility for the stock index is really quite crazy.

Probably also because there are quite a number of companies uh in in the index for example like skhix. These are the companies that my suspect is that there are many traders they really write on this momentum up right so let's say if

the momentum reverse right so it will hit all these stop losses and that's why it will continue to go down so that's why it is very volatile this is a bit similar to the silver market just a couple of weeks ago so this is South

Korea index and then for SDI of course also affected so SDI was already down 4.5% in 3 days before uh from the start of the war as of Friday it closed up slightly higher so it recovers slightly

but you can see that the trend And right this SDI is on a upward trend for quite a while already. But now it seems that okay market is kind of like uh giving back a little bit and then just process what the implications of the US Iran

war. Okay. So the next one right I'll

war. Okay. So the next one right I'll cover some historical context. what

what's the situations with US Iran war because I think for those who never pay attentions to Middle East in details right which include myself right I never really study all this I I just know that Israel and Iran they are not on the same

side right they they always have issue and then all these terrorist attack also quite often if you trace the news over the past couple of years you'll notice that the tensions has been escalating for a while already but now we are at a

direct war between countries right just want to take a step back and then look at what what's the situation right what why this happened Right? So that's why I did a bit of research and there are a couple of slides like this. You can

pause just to read through if you want.

But I will go through a couples which are quite important. Okay. So if you look at the color on the left hand side, right? You can see that they are

right? You can see that they are colorcoded. So there are situations

colorcoded. So there are situations related to the nuclear and then sanction and then proxy original war direct conflict which is the red color one and then the uh diplomacy which is the green one. So the good one is the green. The

one. So the good one is the green. The

rest will be negative. So all this right it started around let's say in the ' 50s uh Iran begins nuclear program and then around late 80s and '90s you can see that there's a decisions to develop nuclear weapons and then there's a

nuclear agreements with China and Russia as of 2002 there's a secret nuclear sites exposed then 2003 there's a diplomatic effort to halt the nuclear programs so all this right is still like

talking about the start of the nuclear programs for Iran then in 2006 right UNCC resolution 1696 right this UN security council They adopt the first

legally binding resolutions to call on Iran to suspend uranium enrichment and then they escalate the sanctions regime and then around 2011 to 2015 sanctions

really devastate Iran's economy. So that

was the period where they noticed that Iran they are getting closer to develop all these nuclear weapons. So they they start with all these uh sanctions and then around 2013 to 2016 you can see

that after Roani wins presidential elections right that there's some swing in terms of like agreement between both sides where Iran side they are okay with pairing down the nuclear programs and

then you can see that there's this P5+1 basically on the US side US UK Germany including China and Russia as well they are on one side that they all agreed with Iran say that you have to scale it

down in terms of all this work that you have done on the nuclear weapons and also all these enrichment programs. So there's some sort of like all these agreement that's signed. So this JCPOA

this is essentially just a agreement right? So there's some diplomacy here

right? So there's some diplomacy here and then during first term of Trump suddenly US withdraw from JCPOA and IRGC this is uh basically Iran military

designated as terrorist organizations and then there's some conflicts that happen around this period 2019 to 2020 straits of homos escalations there's a US embassy in Baghdad threatened their

generals solemn money killed in USA strike so there's a lot of all these escalations then Iran proxy network and regional destabilization this one also is ongoing because Iran they have been

funding all these different groups. So

Iran's quotes force I don't know how to pronounce this by the way uh trains 140,000s to 185,000s partner forces across Hamas Hezbollah Houthis militias in Iraq Syria Afghanistan Pakistan so

all these what they call the axis of resistance right they are the one that causing a lot of trouble to Israel so this one has been ongoing and then around 2023 I'm sure you all remember October 7th's event right Hamas attack

is and then from there there's a lot of all these direct conflicts say for example US strikes Iran back facilities US strikes 85 Iran affiliated targets.

Israel strikes Iranian consulate in Damascus. Then Iran first direct attack

Damascus. Then Iran first direct attack on Israel. So there's like all these

on Israel. So there's like all these escalations. So if you follow all this,

escalations. So if you follow all this, you will notice that actually this war, right, is not like suddenly it started one. Oh, there's always all these

one. Oh, there's always all these historical events that happen that lead to the current war that we are in. Then

you can see that around this is not too long ago, right? This is only like two uh not even two years ago, Iran launches 180 ballistic missiles at Israel and this is still ongoing. Then 2025, right?

which is just last year right Trump restore maximum pressures and then IAEA declares Iran in violation again then continue with war around mid of the year right Israel launches unilateral strikes on Iran US directly attacks Iran's

nuclear sites this one I think we are quite shocked right because now suddenly US was attacked I still remember Trump giving the speech about that okay US strike these three Iranian nuclear sites photo isvahan and natans this one just

shows that US is not just support from from behind already they are really in direct conflict with Iran so they are striking all these nuclear sites and then from June onwards right it it seems like things are cooling down for about 6

months right from from June until end of the year there's nothing much happen then suddenly this year so from Jen onwards right begin US begins massive military build up and then there's a couple of rounds of all these nuclear

talks so green color you see there's some diplomacy right then around 20th of February Trump's issues 10day ultimatum then followed by Trump states of the union address Trump accuses Iran of

reviving nuclear weapons efforts and developing missiles that could reach the US warns that the US is prepared to act.

So this is like really escalating already. Then there's still the third

already. Then there's still the third round of talks and I think some Iran officials came out say that actually there's some progress when it comes to the talk but there's no deal right then after that 27th of February straight away uh embassies evacuated from Iran

and then you can see that 28th of February US and Israel launch strikes on Iran. Then here's the tensions that

Iran. Then here's the tensions that we're in right they call it operation epic fury. Then 1 of March uh Kim

epic fury. Then 1 of March uh Kim confirmed kill Iran retaliates across region. This is the one that they fired

region. This is the one that they fired hundreds of missiles at Israel, US bases in Qatar, Bahrain, UAE, Kuwait, Iraq, Jordan, and Saudi Arabia. Is it really one country versus another six or seven

countries here? Strikes also hit

countries here? Strikes also hit civilian areas and a UK base in Cyprus.

War entered sixth day as of 5th of March. Escalations intensify. US

March. Escalations intensify. US

submarine sing Iranian frigate of Sri Lanka. Kurdish Iranian armed groups

Lanka. Kurdish Iranian armed groups launch groups offensive in northern Iran. Death toll in Iran reaches over

Iran. Death toll in Iran reaches over 1,000 with 6,000 plus wounded. Then

Trump right demands unconditional surrender. Trump declared there will be

surrender. Trump declared there will be no deal except unconditional surrender.

Israel army chief says 80% of Iran air defenses and 60% of missile capability destroyed. Iran ballistic missile attack

destroyed. Iran ballistic missile attack reportedly down 90% from day one. War

ongoing. So right this is the situation that we are in now. Today we are today is 8th of March, right? We still in like just one week into the war. Still don't

know what's going to happen because it seems that if you look at the situation, it seems that US and Israel is the one that they are winning so far, right?

They strike all these Iran sites, all their air defenses got affected. But

what's next, right? Because if they continue to strike like this, it's not like Iran straightway go down and straightway surrender, right? It's still

unlikely at at this moment. The things

that I'm watching now is that whether US or Australia whether they will send troops on the ground, which I don't expect. It's just that if that happen,

expect. It's just that if that happen, right, that means this is going to be a prolonged war. That is something that we

prolonged war. That is something that we don't want to see. So what's the key takeaways, right? Let me quickly

takeaways, right? Let me quickly conclude this before I go to the Q&A, right? One week after the US is Iran war

right? One week after the US is Iran war began, right? Markets have come more

began, right? Markets have come more volatile. The main driver is

volatile. The main driver is uncertainty. Investor do not know how

uncertainty. Investor do not know how long the conflict will last. It will

take weeks, months, or even years before the situation stabilizes. There's also

risk of further escalations. Right? One

key concern is the straight of Homus. If

the straight is blow or disrupted for a prolonged period, global oil and energy prices could rise significantly. Higher

energy prices will likely feed into broader inflations. I think this is the

broader inflations. I think this is the one that people are worried about inflation because if you look at the inflation rate now, it is not fully cool off to 2%, right? It's still lingering around 3%ish. Let's say if energy prices

around 3%ish. Let's say if energy prices continue to go up and inflation go up to four and 5% I'm sure you all still remember 2022 US Fed have to hike rates right and then market really suffer right so this could happen if if all

these tensions continue to escalate market generally struggle when economic growth slows while inflation rises situations often described as speculation there already early signs that growth may be softening I think this is the news that came out Friday

which caused the stock market dip quite a fair bit right so this is not so much about the war it's about the economic data that was released So, US economy shed 92,000 jobs in February 2026, the

largest decline in four months and far worse than the expected gain of 59,000.

If inflation rises at the same time that growth slows, market could experience a deeper draw down that we have seen so far. So, this is the news. US payroll

far. So, this is the news. US payroll

unexpectedly fell by 92,000 in February.

Now, unemployment rate rises to 4.4%.

Scary stuff. Suddenly, there's

unemployment then inflation goes up close up at the same time. This is

really scary. What market want to see is that inflation continue to cool off.

then US can cut rates and then growth with growth doesn't need to keep on going up one as long as able to sustain a current rate that's good enough already but inflation really need to go down to let's say like 2% so if you look

at the monthly job creation in the US right from 2022 until 2025 you can see that every month US economy has been adding jobs and then now you just look

at around late of 2025 to early 2026 right you can see that the job creation is not as stable anymore some months we have new creation some months actually they they lost jobs right I There are some let's say a couple of months ago

when US government shutdown right you can still say that okay the job loss was result of the US government shutdown but now the recent month I don't know I don't think they can attribute to something like okay US government

shutdown right it's not that right so so it's really there's some slowdown in economy and some now we're talking about AI and AI capability has been getting so good right I think there are more and more companies try to use AI to to

basically cut down their labor to to substitute the labor so I I think all this in terms of the trend we are we are just in the early of the trend, right?

So all these thing can continue, right?

If we have more job loss from now, the economy can really struggle, right? So

people are watching on this closely. So

from a long-term investor perspective, right? The key question is how to

right? The key question is how to respond to such uncertainty, right? So

my own approach is to remain invested in the market. So you don't hear me talking

the market. So you don't hear me talking about suddenly there's a war, I should just sell my positions and then wait for re-entry. I don't do these kind of

re-entry. I don't do these kind of things. To me, it's like the money

things. To me, it's like the money invested, I would just stay invested, right? uh for for money that yet to be

right? uh for for money that yet to be invested. Sometimes if I wanted to keep

invested. Sometimes if I wanted to keep more buffer just to even just to make myself feel better, I might do so. So

that that one I have more discretion in terms of the timing, right? But when it comes to the money, the capital that that's already invested to me, I treat that as like the businesses that I own.

So I'm not playing market timing with that. So that's why that's my my

that. So that's why that's my my approach, just stay invested. The reason

is very simple, right? Is because I don't believe that I I possess the skill to reliably time the market, both the entry and exit. So I don't know how to time that. And specifically I don't know

time that. And specifically I don't know how to time the geopolitical events or the economic news. To me these two right is very difficult like how many people are able to time the the event that US and Israel suddenly strike Iran right

almost none right or I would say that most people not able to time even you you know that this will happen you still don't know when it will happen right so that's why if you recognize that you can't time it then don't time it right so that's simple solution to that and

then staying invested this one just just a caveat right staying invested doesn't means that allocating 100% of capital to risk assets so when I say I just stay invested doesn't mean I have no cash at all I might have some cash right I can

call it emergency cash or whatever but some money will be around that I don't need to sell my stock holdings to fund anything right let's say if you have some immediate needs right say for

example you you need to use the money to buy houses to to do renovation to travel whatever it is right it's better that you keep cash to meet all these uh liquidity outflow instead of like just put your money in the stock market then

you need to sell within the short term so that that's how I manage my liquidity so it's important to maintain a safety net so this one for those who listen to our debate with Mr. do, right? He keep

mentioning about the safety net, right?

Which which I 100% agree. I don't think even if I'm very bullish on the stock market, right? I still don't put 100% of

market, right? I still don't put 100% of my money. I I think it's important to

my money. I I think it's important to have safety net to allow us to withstand the market volatility without being forced to sell at the wrong time. In

terms of my safety net, sorry, so I I have relatively low financial commitments and I already reached my CPF full retirement sum. So because of that foundation, I'm comfortable continuing to invest in the stock market despite short-term volatility. I think this is

short-term volatility. I think this is very important because if you when you get worried you look at the CPF you know that okay this sum of money is there you will compound at 4% regardless even the stock market site is a lot more volatile

we we are fine we don't count on that so I think that's very important second thing is talking about this low financial commitments is that I I don't have huge commitments say for example I don't I don't stay in condo I don't need

to pay couple of thousand dollar of of mortgages right I don't have car so as I keep all these commitment low I don't need that money that much that's why I'm okay in terms of emotionally I I'm not that destructed by all this volatility

then uh even if this conflict evolves into a more serious crisis history shows that such periods eventually passed for example like Russia Ukraine war like now how many people are talking about this it's almost like the news died down

already and then people just stop worrying about that so I think for even for US Iran war although now we are still early right we could see some volatility over the coming weeks and months right that is definitely possible

but if you have a long-term horizon your horizon is like 3 years 5 years 10 years ahead Right? Would you care about like

ahead Right? Would you care about like what's happening within now like like current months, right? You won't, right?

Because all these thing it will eventually pass one long-term investor who remain disciplined and patience are usually rewarded over time. And this

rewards right is for those who stay invested, stay disciplined, continue to invest, don't panic sell. So I think all this is very important. So before I I'm closing my presentation here already but I just want to just briefly mention

about I just met a friend. Okay. Uh we

we chithat about all these things, right? As usual, we talk about market,

right? As usual, we talk about market, people are talking about war now, right?

So I asked my friends like okay what what do you invest in right then my friend just shared to me that okay I'm getting a bit I get some exposure in oil ETF then I asked like why oil ETF spec

specifically but why not other sectors right why focus on this sector and the friend just mentioned that because of the war right then oil prices goes up right he just want to take advantage on this and just buy some oil ETF so if you

ask me like does does it make sense or not I would say that it makes sense for those who want to bet on the short term right you see that okay I want to write on this trend this trend could be one week or it could be 10 weeks, it could be 1 year or more, right? I I don't

know. You need to come up with with your

know. You need to come up with with your own predictions. I I don't know how to

own predictions. I I don't know how to predict this. But apparently for my

predict this. But apparently for my friend, he just want to ride on the trend. He just buy all these oil ETF. So

trend. He just buy all these oil ETF. So

this one just to illustrate to you someone who is like thinking over short-term riding on trend versus someone who is thinking long-term like me, right? Because for me, if you ask me

me, right? Because for me, if you ask me whether I will buy oil ETF or not, the question that I ask myself is not like okay, do I need to analyze all this war uh supply and demand whether this conflict will escalate? I kind of like

lazy to analyze all these things. To me,

if I wanted to allocate to oil or energy ETF, the first question I will ask myself is that if I look at all these ETF for the top five or 10 companies, what's their margin like? This these

kind of questions that I will ask like I want to know whether they they are able to sustain the margin because for for commodity markets like oil, right?

Whether the companies make money or not, it really depends on the crude oil price. If the crude oil price increase,

price. If the crude oil price increase, right, definitely they will earn more.

If let's say situation like this suddenly just cool off and then oil prices just normalize. If you look at if the oil price drop of course their profitability will be affected right then the questions to you is that do you

want to get exposure to all these oil companies where their profitability it really depends on the crude oil and crude oil depends on all these geopolitics tensions and of course the supply and demand. Do you want to bet on

that or not? That's why I wanted to say that maybe it makes sense to bet on it for short-term but it is not a good long-term thesis right that's why I would stay away from this kind of investment just to show to you that the whether if if you look at our holdings

you look at our exposures right different people have different exposures but I would say that for each of these exposure right there should be some thought process there should be some thesis behind that and let's say if you when you analyze your own thesis right I think at least you need to ask

yourself right okay this thesis right is it depending on short-term uh dynamic short-term trend or is it like some kind of like long-term trend For me, I will bet on the long-term trend because short-term whether it's volatile or not, but as long as it work outs over the

long term, right, then I I will be fine.

And usually I can tell you those long-term trend, right, is more predictable as compared to short-term trend. Say for example, short-term trend

trend. Say for example, short-term trend are, you know, whether oil price will increase or drop, whether this war will escalate or it will cool down, cool off.

So these are the short-term thing, right? But when we talk about long

right? But when we talk about long terms, right? Long-term think are things

terms, right? Long-term think are things like for example whether technology will get even better or not. So to me, these are the long-term trend, right? It will

only get better. it will only be more become more dominant. uh if you ask me the capability of Google's AI will it become better uh over the next 5 years 10 years the answer is always yes right it's easy to predict but even though it's easy to predict doesn't means that

people are interested because if you want to bet on these things I tell you cloud computing there's a lot of growth in this sector but if you ask me how long it will take I will tell you easily 10 15 years right then people will say

ah 10 15 years I don't want to wait that long I want to back on now what's going to happen next week what's going to happen next month so short-term trend is more exciting so that's why people are especially those who invest in stock market right they don't have patience to

wait right they want to bet they want to be right and they want to be right now they want to they can't wait right no patience that's why I I say that for our group here right for those watching to my channel right we are in I would say

subset within all the equities investors right we are the subset that say that okay we just don't care about those that are their short-term one the traders they can play their games right nothing wrong with that right or you want to do

swing trading on all these oil stocks right they they can do that but we are not going to do that we are in this small circle here to say that we bet for the long-term trend. We stay invested, we stay disciplined, we we just hold on

to our investment, right? And if you don't know about like how to pick which companies that that are riding on all this long-term trend, right? Even if you just just buy S&P 500 or MCI were like this kind of like broadbased market,

right? you are still closer to the

right? you are still closer to the companies that that are riding on the long-term trend rather than those uh smaller one because smaller one I think they are smaller market caps to me it's like there are usually some problem with

the companies for example they are maybe their profitability isn't as stable their business mode isn't as stable and whether you bet on those whether it's like commodity type business or whether the business is like yet to be proven so

all these companies usually their market cap also smaller so it's fine to have some small exposure as you invest in broad market right you will still have some exposure to these compan companies I think that's fine but your core

investment should be in good companies right like great companies like companies with huge market cap right that's why if you look at my portfolio still concentrated to those like larger market cap one because I I do think that these kind of companies right if you own

them over the long term you won't be that worried of war that's uh how I will conclude today's session remember to subscribe see you in the next one bye-bye >> [music]