Stocks to Buy Amidst the Ongoing Conflict in the Middle East

The recent escalation in the Middle East, marked by the United States and Israel's joint attack on Iran, signals a shift in regional dynamics. Historically, the U.S. has encouraged Israel to maintain neutrality in such conflicts to avoid inflaming long-standing tensions between Arabs and Israelis. Now, with Israel directly involved, the conflict risks becoming more prolonged and complex. This situation raises a critical question for investors: what stocks should you own while the descendants of Isaac and Ishmael, rooted in ancient biblical history, face renewed conflict?

Understanding the historical and geopolitical context helps clarify the risks and opportunities in today’s markets. This post explores how the ancestral war between Israelis and Arabs influences global stability and investment strategies, focusing on sectors and stocks that may offer resilience or growth during turbulent times.

The Historical Roots of the Conflict and Its Modern Impact

The conflict between Israelis and Arabs traces back to Biblical times. According to Genesis 16, Abraham fathered two sons: Ishmael, through his wife’s servant Hagar, and Isaac, through his wife Sarah. Ishmael is traditionally considered the ancestor of the Arab peoples, while Isaac is the forefather of the Israelis. The Bible records that God blessed Isaac’s descendants but not Ishmael’s, setting a foundation for centuries of tension.

Today, this ancient rivalry manifests in political, religious, and military conflicts. The recent U.S.-Israel attack on Iran marks a significant escalation because it breaks the usual pattern of keeping Israel out of direct military actions to avoid provoking Arab nations. This involvement suggests a longer, more intense conflict ahead, with implications for global markets.

How Conflict Affects Markets and Investment Strategies

Conflicts in the Middle East often disrupt global markets, especially energy prices, defense spending, and regional trade. Investors face uncertainty but can find opportunities by focusing on sectors that tend to perform well or remain stable during geopolitical tensions.

Energy Sector

The Middle East is a major oil-producing region. Conflicts often lead to supply disruptions or fears of shortages, pushing oil and gas prices higher. This benefits companies involved in:

• Oil exploration and production

• Pipeline and infrastructure operations

• Energy equipment and services

  
  

For example, companies like ExxonMobil, Chevron, and Schlumberger often see increased demand and higher stock prices during Middle East tensions. Indeed, ExxonMobil and Chevron (I own shares in both) have been hitting new highs, even as the overall market dives with days where the Dow Jones Industrial Average (DJIA) is off 800+ points. With the war now escalating, and likely prolonged due to Israel's direct involvement, the demand for oil and the profits of these stocks should continue to soar. Maybe there was good reason President Trump had to take Venezuela when he did, given that Venezuela is one of the largest oil producing nations in the world!

Defense and Security

Heightened conflict increases government spending on defense and security. Stocks in this sector typically gain as countries boost military budgets. In fact, many millionaires were made during wartime as they sold the military key components and weapons. Key areas include:

• Aerospace and defense contractors

• Cybersecurity firms

• Surveillance and intelligence technology providers

  
  

Lockheed Martin, General Dynamics, Raytheon Technologies, and Northrop Grumman are examples of companies that may benefit from increased defense contracts. I own shares in General Dynamics.

Precious Metals and Safe Havens

Investors often turn to precious metals like gold and silver during times of uncertainty. These assets act as a hedge against inflation and market volatility. Without a doubt, wars cause increased government spending which results in more inflation.

Stocks of companies mining these metals or exchange-traded funds (ETFs) focused on precious metals can provide stability. Personally, I prefer either the shares in the companies that mine the metal, or the physical metal itself, with holding physical metal being the best way to own the metals.

Both gold and silver hit record highs before banks like JP Morgan manipulated prices dramatically lower. On January 30th, I published a blog article indicating what happened, and why I thought the metals rally was NOT over, that both gold and silver would again rise and higher highs (See: Is the Precious Metals Rally Truly Over or is This Just a Strategy to Manipulate Prices? )

Stocks to Consider Owning Now

Based on the current geopolitical climate, here are some specific stock categories and examples to consider:

1. Energy Giants

• ExxonMobil (XOM): A global leader in oil and gas, benefiting from rising energy prices.

• Chevron (CVX): Strong upstream and downstream operations with a history of weathering geopolitical risks.

  
  

2. Defense Contractors

• Lockheed Martin (LMT): Major supplier of military aircraft and missile systems.

• Raytheon Technologies (RTX): Provides advanced defense electronics and cybersecurity solutions.

  
  

3. Precious Metals & Miners

• Gold and Silver (SD Bullion is an excellent metals dealer: www.sdbullion.com)

• Newmont Corporation (NEM): One of the world’s largest gold producers.

• Barrick Gold (GOLD): Operates mines globally, often benefiting from gold price increases.

  
  

4. Technology and Cybersecurity

• Palo Alto Networks (PANW): Specializes in cybersecurity, critical during conflicts involving cyber warfare.

• CrowdStrike (CRWD): Provides cloud-based endpoint security, increasingly important in modern conflicts.

• Microsoft (MSFT): Wars today are fought just as much with technology as they are with physical weapons. Microsoft has deep relations with the Pentagon, and their stock price has recently dipped. Microsoft is also the largest investor in OpenAI, which just signed major contracts with the Pentagon.

• NVIDIA (NVDA): NVIDIA is expensive, but they have firm orders for years. Their chips and hardware are becoming the backbone for the next wave of massive datacenters, mostly focused on AI. Military conflicts in the future will rely heavily on AI technology, as will every industry on the planet.

  
  
  
  

Risks to Keep in Mind

Investing during geopolitical conflicts carries risks:

• Market Volatility: Stock prices can swing sharply based on news and developments.

• Economic Slowdowns: Prolonged conflicts can disrupt trade and economic growth globally.

• Policy Changes: Sanctions, tariffs, and government interventions may affect company operations.

  
  

Diversification and a long-term perspective help manage these risks.

How to Build a Resilient Portfolio

To navigate uncertainty, consider these strategies:

• Diversify across sectors: Don’t rely solely on one industry or region.

• Include safe-haven assets: Precious metals and defensive stocks can balance risk.

• Monitor geopolitical developments: Stay informed to adjust your portfolio as needed.

• Focus on quality companies: Strong balance sheets and stable cash flows help weather storms.

  
  

Final Thoughts on Investing Amid Middle East Conflict

The renewed conflict involving Israel and Iran, with the United States directly participating alongside Israel, signals a potentially prolonged period of instability. This situation affects global markets, especially energy, defense, and safe-haven assets. By understanding the historical roots and current geopolitical shifts, investors can make informed decisions.

Owning stocks in energy, defense, precious metals, and cybersecurity sectors offers a way to protect and potentially grow your investments during turbulent times. Staying informed and maintaining a diversified portfolio will help you navigate the challenges ahead.

Best of all, the companies mentioned above will do well even if the current tensions deescalate. But frankly, I don't think that will happen this time.

Greek philosopher Socrates stated that "All wars are fought for money". The United States needs inflation to manage the $38.7 trillion debt. We need tighter security around our border. We need production of goods in the United States....whether military goods or commercial goods. And better jobs never hurts the politicians. A prolonged serious war accomplishes all these goals.

Since neither you nor I will stop the conflict, we might as well position ourselves to gain from it.