By Jason Zweig
Nobody can know for sure how the war with Iran will affect investments. But I'm quite sure I know how it will affect investors.
You will be blitzed with opportunistic marketing messages from the financial industry. You're going to be urged to keep your money safe from war and inflation -- or to capitalize on them -- with these funds, this asset, that industry, these AI-driven recommendations, this secret set of trading signals, these proprietary algorithms. All for a small fee, of course.
With no end to the war in sight, investors should be on the defensive -- not only against the bad news the war could bring, but also against the bad ideas the financial industry will be pitching.
The assets most likely to benefit during wartime are already expensive. If you didn't buy an umbrella while the sun was shining, that protection will cost you dearly now.
And sudden moves based on anybody's geopolitical forecasts are a bad idea. The U.S., Iranian and other governments have themselves been surprised by many of the twists and turns of this war so far.
An "excursion" that the White House expected to lead to a quick collapse of Iran's theocratic regime has already lasted for weeks. Leaders of states in the Persian Gulf, The Wall Street Journal reported this week, now want Iran's military rendered incapable of further attacks.
A lot of money is already in motion.
Leading defense and aerospace stocks such as Lockheed Martin, Northrop Grumman and L3Harris Technologies are each up at least 24% in 2026.
With the price of crude oil up 67% this year, exchange-traded funds investing in energy stocks have attracted more than $7 billion in new money, according to FactSet, with $2.3 billion gushing in since the beginning of March alone.
ETFs investing in gold have attracted $1.5 billion so far this year, with broad-based commodities ETFs drawing in another $2.4 billion.
All this is based on observations so obvious they're hard to resist: War requires weaponry, the supply of oil is being choked, fear and uncertainty inflame the demand for gold.
But the market prices of stocks and commodities have already absorbed the obvious.
The companies in the iShares U.S. Aerospace & Defense ETF, for instance, are trading at an average of 41.5 times their earnings over the past 12 months, more than 50% costlier than the stock market as a whole -- with many near all-time-high valuations.
In 2022 and 2023, the stocks in State Street's Energy Select Sector SDPR ETF traded at an average of eight-to-10 times earnings, according to FactSet; this week, they were valued at 22.4 times.
Gold, up 51% in the past year, remains near a record high, even after falling 12% this month.
Gold's retreat could be a sign that the fear trade may already be partly receding. Since March 2, the first trading day after the war started, defense and aerospace ETFs have lost at least 5%.
After all, what's about to happen next in a war is one of the hardest things in the world for investors -- or policymakers -- to predict.
Mark Higgins, an investment adviser at Irvine, Calif.-based IFA Institutional and author of "Investing in U.S. Financial History," a book that chronicles markets from 1790 to the present, has a suggestion. He offers an excellent question to ask if anyone urges you to make a major portfolio move based on a prediction about where the war is headed.
"How can you say that," Higgins suggests asking, "when the governments themselves don't know what's going to happen next?"
That should shut down whoever is trying to wheedle you into gimmicky strategies, or chasing the returns of recently hot assets.
This is a time when a good financial adviser should be trying to talk you out of taking drastic action, not urging you into it. Selling a few losing investments to offset taxable gains elsewhere could make sense. Making wholesale shifts in response to fears that might never materialize doesn't.
If you're worried that the war could send inflation skyrocketing, consider I bonds or inflation-protected securities from the U.S. Treasury.
I bonds, which you can buy only through the Treasury directly, are yielding 4.03%; that semiannual rate will be reset on Apr. 30. You can buy Treasury inflation-protected securities directly from the government, in a brokerage account or packaged into a mutual fund or ETF. They're still offering decent returns of roughly 1% to 2% over the official inflation rate, depending on maturity.
Before this war is over, it's likely to generate a lot more surprises -- positive and negative. Even if you don't feel nervous now, unexpected setbacks in the war could later make you vulnerable to a fear-based marketing message.
Surprising events and negative news can always tempt investors into suddenly adopting radically different strategies: fast trading, market timing, ultrahigh dividends and other techniques that purportedly reduce risk or raise return.
That's why I want to recommend a quirky, metaphorical way of thinking about investing when uncertainty is this high.
You should think about overhauling your portfolio the way people should -- but often don't -- decide about adding tattoos or body piercings.
If you get a stud in your navel or a little tattoo on your ankle, you aren't likely to look back later and kick yourself. If, however, you get a jumbo ring in your nose, or "I Love Mike" or "Lisa and Me 4Eva" inked across your entire chest or back, you might end up wondering what on earth you were thinking -- and unable to undo it without some discomfort.
Big, sudden portfolio changes are like that: easy to put in place and hard to reverse. Whatever you do if this war worsens, you should avoid doing anything that can't be easily and cheaply undone.
Write to Jason Zweig at intelligentinvestor@wsj.com
(END) Dow Jones Newswires
March 20, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
