A massive regional conflict could see oil prices spiking across the globe
Oil prices could spike $30 to $40 in the event of a months-long Iran - Israel war, warns Bank of America. High-profile figures like JPMorgan boss Jamie Dimon and billionaire Bridgewater founder Ray Dalio have repeatedly cautioned about rising geopolitical risks.
In November, geopolitics was described as the biggest tail risk in Bank of America’s monthly fund manager survey. Nevertheless, stocks have surged since then, notwithstanding recent inflation-linked slippage. Indeed, Bank of America’s April survey shows that inflation has replaced geopolitics as markets’ biggest tail risk.
Instead of questioning this relative calm, Liberum strategist and blogger Joachim Klement says investors should know the “vast majority” of geopolitical events just don’t matter for stocks.Hugh Wallace: ‘I lost a lot of money during the financial crisis. Once you get badly burned, the fear never leaves you’Klement, author of a 2021 book on geopolitics for investors, has written a brief “armed conflict investor survival guide”, which basically consists of a simple message: don’t panic.
Accordingly, the “superior investor” should heed the evidence, and your “default reaction should be to buy risky assets as they sell off temporarily”.
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