War, Tariffs, and a Market That Refuses to Fall

"The first rule of compounding: Never interrupt it unnecessarily." — Charlie Munger

6/25/20252 min read

Gold is down 2.5%, oil is off 10%, the VIX is down more than 20% since last week while equity markets are rallying—despite US military strikes on Iran. In a world where geopolitical conflict, trade tensions, and inflation threats are rising, one might expect fear to take hold.

Instead? Investors remain unfazed.

Exogenous Events Are Stacking Up

From a purely risk-based perspective, here’s what we’re looking at:

  • Oil down to $67 Markets are signaling no major disruption to energy supply chains, to include the Strait of Hormuz, despite escalated regional tension.

  • Gold falling back to $3300 Safe-haven demand has declined, suggesting little concern over systemic escalation.

  • Equities climbing The market continues to melt up higher, with retail-driven flows pushing markets higher—regardless of fundamentals or tariff threats.

Have Markets Priced in the Outcome? Or Are They Just Ignoring It?

There are two possible interpretations of this rally:

  1. Markets are efficient and believe the conflict will de-escalate quickly due to poised global leadership.

  2. Markets are momentum-driven, fueled by retail FOMO, passive flows, and excess liquidity—not fundamentals.

Why This Matters

  • The absence of fear is not the absence of risk.

  • Retail investors are buying into narrative, not pricing in the probabilities.

A market that shrugs off inconsistent tariff policy, geopolitical conflict, rising delinquencies, and stretched valuations is not signaling strength. It's fragility masked by optimism.

With that in mind, staying invested often outperforms trying to time the market. If retirement is near, it may be prudent to take some risk and profits off the table. But for long-term investors with a 5+ year horizon, dollar-cost averaging has historically been a resilient play.

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