“Well, Dimitri, there’s no point in you getting hysterical at a moment like this!”

You might remember a Stanley Kubrick film called Dr. Strangelove or: How I Learned to Stop Worrying and Love the Bomb.

Markets are in the bunker, and Trump is donning the cowboy hat:

Source: The New Yorker

The seminal doomsday satire was filmed in a binary colour palette of black and white, at a time when bunkers were in fashion.

Speaking of bunkers…

A close friend of mine recently returned from a visit to Tel Aviv, where she inhabited a bunker on and off for weeks because a theocratic death cult regime has a multi-millennia beef with a different tribe.

The market doesn’t take tribal sides; it only seeks information on future value.

And yes, that oil price is mighty high.

So, everyone is now a Strait of Hormuz expert or trying to be.

That’s the market trying to work out informational asymmetry around how much of a cowboy Trump actually wants to be.

You can deep-dive into Iran’s strategic optionality when it comes to Karg Island’s production volumes relative to other oil production hubs.

And the fact that Trump proposed a Karg Island invasion in the 1988:

Source: Bloomberg

Turns out everything has been thought about well in advance.

This business wrote about the Strait of Hormuz 20 years ago.

Seriously. It’s worth paying attention to alternative viewpoints as an investor.

I started writing about the Strait as soon as I started studying commodities markets 7 years ago.

2 years prior, in London, I was reading a 200-page report on Iran’s naval capabilities with itemised details on materiel and personnel in the Strait.

There are solutions.

And the current escalation-standoff is certainly apex-level brinksmanship.

I can’t tell you how the chips will fall.

The cowboy hat is being dusted off in the Oval Office right now.

So you and the rest of the market are likely thinking…where on earth do I put my money right now, when the proverbial is hitting the fan?

The energy progression

Energy is the focus, clearly.

But there’s a progression. Because energy is derived from physical assets, and you can’t make the chips without energy and stuff in the ground.

Oil (obvious)…next, definitely LNG….next, probably uranium…next alternative critical energy raw materials.

That means lithium could soon follow.

And then perhaps, the less expected raw materials in batteries.

With copper as the bedrock of it all as a conductive metal.

So yes!

It’s still real stuff, it’s still commodities — even though the ASX 200 Resources Index [XJR] has sold off aggressively:

Source: Market Index

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This ain’t over.

I suspect, this is big funds cashing up on the long-term trend.

Source: Trading View

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Hold your nerve.

You’re not going to be able to time the top, just like you’re not going to be able to time the bottom.

What you can do, however, is stay informed about long-term macro themes and the structure of our financial reality.

And so today, we need that crude moving through the Strait.

That’s energy, that’s a physical asset.

And the physical asset is what enables technological advancement.

Over a longer investment horizon than the current red numbers on everyone’s screen, that’s about as straightforward an investment thesis you can get.

Learn more about how I’m thinking about commodities in my latest presentation.