If you've been watching the news lately, you already know, the U.S. has initiated military strikes in Iran, oil prices are climbing, and the markets are getting jumpy. I've been watching it too.
Here's something you may not know about me: before I spent four decades investing the Buffett way, I served in U.S. Army Special Forces. A few of the guys on my team did as well. That background gives me a particular lens on moments like this, one that's part geopolitical read, part market history, and entirely about staying calm when everyone else isn't.
This isn't a news analysis. It's a plain-English investing framework for exactly this moment.
What My Military Background Tells Me About This Conflict
I want to give you my honest read before we get into the market stuff because I think it actually matters.
Here's the thing about Iran right now: they've spent years making enemies, and the allies they do have; China, Russia are each buried in their own problems. There's no cavalry coming. And we went on the offensive at a moment when Iran is at its weakest militarily. My gut, based on years of experience in this space, is that we're talking weeks to a couple of months here. Not years. Not World War III. This stays regional.
I want to be clear, that's my personal read, not a forecast. But it does shape how I'm thinking about what comes next.
And here's the real point I want to make: the conflict itself isn't what you should be losing sleep over as an investor. What matters, what always matters, is what uncertainty does to the prices of wonderful businesses. Because when prices move, opportunity moves with them. That's what we're going to dig into.
What Wars Actually Do to the Stock Market (And Why It's Not What You Think)
Most people assume war is bad for markets. It feels obvious, right? Conflict, uncertainty, fear, markets go down. Except the historical record says something a lot more interesting than that.
Let me walk you through what happened during World War II, because it's one of my favorite examples of just how non-intuitive markets can be.
The market bottomed out in 1932. It climbed from there, peaked around 1938, and then as the war started heating up, dropped aggressively back down to a new bottom in 1941. So far, that matches what most people would expect. War starts, markets fall. Story over.
Except that's not where the story ends.
As America started industrializing for the war effort, the market came off that 1941 bottom and essentially didn't stop going up until around 1965. One-way ride. Driven by government spending, wartime production, economic mobilization. The very thing that looked like a crisis became the catalyst for one of the longest bull runs in market history.
That's what I mean when I say this stuff is non-intuitive.
Now does that mean this market is headed straight up from here? Not necessarily. Markets absolutely could go down. I'd put the odds at something like 30% chance of a real downturn against 70% that we don't see a major crash from this.
Here's why I'm not more worried: everyone can see this conflict. The markets have already started pricing it in. In my experience, it's never the visible crisis that crashes things. It's the black swan, the thing nobody sees coming. That's what catches markets off guard, not the story that's already on the front page of every newspaper.
Oil Prices, Inflation, and Interest Rates — Here's What I Actually Think
Let's talk about the stuff everyone's watching right now.
Oil prices are going up. That part isn't complicated. Iran isn't shipping oil during this conflict, and the Gulf of Hormuz which supplies a huge percentage of the world's oil is under pressure. When supply gets disrupted there, prices move. And even beyond this conflict, we've been on a long-term trajectory of governments around the world monetizing their debt. That keeps upward pressure on oil prices over time. This conflict is accelerating something that was already in motion.
That feeds inflation. Higher oil means higher fuel costs, higher transport costs, higher pretty much everything costs. Nothing surprising there.
Interest rates are where I'll be upfront with you, this isn't my specialty. But here's my gut read after watching markets for four decades.
There are two forces pulling in opposite directions right now. On one side, monetizing debt is inherently inflationary, which should push rates up. On the other side, the government has what amounts to an unlimited supply of money to buy its own debt internally, which pushes rates down. Those two forces are basically arm-wrestling each other into a stalemate.
My read? Rates probably stay in a range. Don't expect a dramatic move in either direction.
Is a Recession Coming? My Honest Take
I'll be straight with you here, because I know this is what a lot of you are really worried about, especially if retirement is somewhere on your horizon.
Will we have a recession? Yes. At some point, we will. In 140 years of market history, recessions are a certainty. We've been putting this one off for a long time, and by historical standards, we're overdue.
Will Iran cause it? Probably not, at least not if this conflict resolves in the weeks to months timeframe I expect. Recessions tend to get triggered by the thing nobody saw coming. The black swan. Not the crisis that's already on every front page.
But here's the more important question and this is the one I'd encourage you to sit with: it's not whether a recession is coming. It's whether you'll be ready when it does.
That's exactly what we're going to talk about next.
What Warren Buffett Is Doing — And What It Tells Us
When I'm trying to figure out the right move in a market like this, I don't look at what the pundits are saying on TV. I look at what the best investors in the world are actually doing with their money.
And right now, Warren Buffett is sitting on about $380 billion in cash.
Let that sink in for a second. That's an order of magnitude larger than anything he's held at any point in the last 15 to 20 years. This is a man who has spent his whole career buying wonderful businesses. And right now, he's waiting.
Here's what I want you to understand about that cash position, because most people get this wrong. It isn't fear. It isn't sitting on the sidelines. It's optionality. That cash is earning a decent interest rate, keeping up with inflation, and staying ready to go to work the moment wonderful businesses come available at attractive prices.
I'll be real frank with you, we're quite heavily in cash in our funds right now too. Same reason.
This is actually one of the most important things Rule 1 investing teaches. What looks like timing the market from the outside really isn't. When prices get stretched and the market gets greedy, disciplined investors naturally step back. When fear takes over and prices drop, they step back in. You don't have to guess. The market's own price level guides you.
We end up out when it's expensive. We buy in when it gets cheap. That's not a prediction. That's a process.
The One Thing Every Investor Should Do Right Now — Build Your Watch List
Okay, here's where I want to give you something real to do. Not "stay diversified." Not "ride it out." Something you can actually sit down and start on today.
If you haven't already built a Watch List or what I sometimes call a Wish List, you really want to get going on that right now.
A Watch List is simply a list of wonderful businesses you've already studied, already understand, and already know what you'd be willing to pay for them. That's it. So when the market drops, whether it's from this conflict, a recession, or some black swan nobody saw coming, you're not sitting there panicking. You're shopping. You know exactly which businesses you want to own and what a great price looks like. All you're doing is waiting for Mr. Market to give you that price.
That's the whole game, right there.
Now here's the part I love telling people, because it always surprises them: you already know more than you think you do.
When I was a river guide just starting out, I knew guns, I was an Army veteran, guns were part of my world. I knew sleeping bags. I knew the travel industry because I lived in it every day on the Colorado River, and that naturally led me to understand the cruise ship business because it's really the same story. I rode a Harley-Davidson, so I understood Harley-Davidson as a business. I started right where I was standing.
That's exactly what I want you to do. Start where you are.
Your Circle of Competence, which are the businesses you genuinely understand, is already bigger than you realize. And here's the good news: it grows over time, naturally, as your curiosity leads you deeper.
What I'd steer you away from is trying to chase sectors. Trying to figure out which industry is going to boom next because of this conflict is exactly what thousands of Wall Street analysts are paid full-time to do. That's their game, not ours. Our game is simpler and frankly a lot more powerful: know your businesses, know your price, and be ready when the opportunity shows up.
How Rule 1 Investors Think About Market Events Like This
Let me share how we actually think about something like the Iran conflict from an investing standpoint, because I think it'll reframe the whole thing for you.
In Rule 1 terms, a market "event" is anything that knocks the price of a wonderful business far below what it's actually worth. That's the definition. And here's the beautiful part: you don't have to predict whether this conflict is going to be one of those events. You just watch the prices of the businesses on your Watch List. If this is a real event, those prices drop. Your Watch List tells you whether that drop represents genuine value. The market does the work for you.
No guessing. No forecasting. No panic. Just watching and waiting for your price.
There's something else I want you to sit with here, because I think it matters beyond just the investing piece.
When markets are falling, somebody has to step in and start buying, otherwise prices just keep going down. The disciplined investor with a Watch List, cash ready to deploy, and a clear sense of what things are worth is exactly who the market needs in those moments. You're not just protecting yourself. You're actually performing a genuinely valuable function.
And when calm returns, as it always does, that's when the preparation pays off.
That's what it means to invest the Rule 1 way.
Ready to Build Your Watch List Before the Next Drop?
I want to acknowledge something before we wrap up. Moments like this are hard, not just for markets, but for the world. And it's always worth keeping that perspective.
At the same time, the reality of investing is that volatility creates opportunity for the investor who is prepared for it. That's not a cynical thing. It's actually one of the most empowering things about learning to invest the right way. You stop dreading these moments and start recognizing them for what they are.
If you'd like to get better at doing exactly that, identifying wonderful businesses, building your Watch List, and knowing what to do when prices drop, that's precisely what we teach in our 3-Day Virtual Investing Workshop. My mentors and I spend three full days on Rule 1 principles, entirely online.
I hope this has helped bring a little clarity to what's happening in the markets right now. And with that said, it's time to go play.
