The Fog of War and the Markets: A Fiduciary’s Guide to Navigating Uncertainty
Part I: The Geopolitical Risk Premium Investors Are Struggling to Price
March 11, 2026
We are navigating one of the most complex investment environments I can remember. I began investing in the 1960s, and periods like this—when geopolitical conflict, economic uncertainty, and structural financial changes collide—I can say are rare.
Today investors face:
A hot war in the Middle East
Global energy supply disruptions
Questionable economic data from the US government, which provides the world’s benchmarks
Structural shifts in how retirement capital is invested
Together these forces have created a fog of uncertainty that makes it difficult even for experienced investors to see clearly.
As a fiduciary for much of my professional life starting as an auditor in 1969 and later as a securities adviser until June 2024, my basic responsibility has always been determine the facts and protect capital.
Recently I moved my equity portfolio to cash—not because I believe markets are permanently broken, but partly, for the reasons that affect all investors, because visibility has deteriorated. When visibility declines, risk rises.
The goal of this article is not to encourage panic. Quite the opposite. The goal is to help investors navigate uncertainty without emotional decision-making.
Volatility does not have to equal loss of capital.
Loss of capital usually occurs when emotion replaces strategy.
Acknowledge the Headwinds
Markets are nervous for good reason. This is not a “boy who cried wolf” moment. Several real pressures are hitting the system simultaneously.
1. The Geopolitical Premium
The Middle East conflict has disrupted critical energy flows. Roughly 20% of the world’s oil normally moves through the Strait of Hormuz, so the understanding that the shipping stopped immediately impacted pricing.
Strategic petroleum reserve releases, political pressure on producers, and government market interventions in the futures market may cap extreme spikes, temporarily as we saw from the snap-back from $120 to under $80; but today we saw the bounce up to $88-$92 and we know that higher energy prices will soon ripple through the global economy.
Consider:
transportation
manufacturing
agriculture
consumer goods
Energy is the base cost of everything. Not just in America, but throughout the world.
When energy deliveries stop, costs rise sharply, and inflation pressures spread quickly.
2. Structural Illiquidity in Retirement Assets
Another underappreciated risk is structural.
Regulatory changes in the United States have encouraged greater private equity exposure inside retirement accounts.
Private assets are less liquid and less frequently priced.
In stable markets this appears beneficial. During volatility it can become dangerous to those who require liquidity.
We saw a preview of this in 2020. Public markets sold off first because they are liquid. Private assets followed later, but after valuations were finally adjusted.
As well, this week we saw a reminder of 2020 when private investment vehicles – BlackRock for example -- began restricting redemptions.
Illiquid assets rarely fall immediately.
But when they do adjust, the moves can be abrupt. If you are the last one out, you’ve been left holding the bag. And if you are not friends and family of the manager, you can imagine who is the last one out.
3. The Data Trust Deficit
A third issue—less dramatic perhaps but equally important—is deteriorating confidence in economic data.
Investors rely on official statistics to assess economic direction. Recently that system has been showing cracks.
Several major US economic data series have been delayed, degraded, or partially missing.
For example:
No Consumer Price Index data were collected for October 2025 during the government shutdown. That gap will never be reconstructed.
GDP revisions and income data releases in early 2026 have been delayed because required source data are unavailable.
The January 2026 Employment Situation report was postponed due to the partial government shutdown.
In practical terms, this means economists and investors must fill gaps using models and assumptions.
Private forecasters are increasingly reconstructing economic conditions using partial indicators and estimates rather than full datasets.
Even when data are released, quality is slipping.
Budget constraints have forced federal statistical agencies to reduce data collection efforts. Response rates to key labor surveys have declined significantly since the pandemic. Smaller samples require heavier statistical adjustments.
The result:
noisier inflation readings
larger revisions
less reliable short-term signals
For analysts trying to interpret the economy in real time, uncertainty has increased dramatically.
When the data themselves become less reliable, market reactions often become more erratic.
The Danger of Recency Bias
Periods like this create another powerful risk for investors: recency bias.
When we live through dramatic events—war, inflation, political tension, chaos in the White House—our brains begin to assume this is the permanent new reality.
We project today’s fear far into the future.
History shows something different.
Markets and economies absorb shocks constantly:
wars
recessions
energy crises
financial panics
Over time, the global economy has proven remarkably resilient.
Governments may fail. Policies may be misguided.
But productive economies adapt.
The key for investors is not predicting every shock.
The key is being financially standing when the dust settles.
A Framework for Restraint: Pruning, Not Panicking
If current volatility is making you feel compelled to “do something drastic,” pause first.
If you are young and relatively inexperienced or unsophisticated in financial markets, instead of panic liquidation, consider a surgical approach to risk reduction.
The objective is simple:
Protect principal so you can participate in the eventual recovery.
Three principles can help.
1. Separate Price From Trend
In volatile markets, prices swing wildly on headlines.
Before the current geopolitical escalation, stocks were trading largely on earnings expectations.
Today many are trading on fear. As I write this, the CNN Fear & Greed Index is sitting at 26, one point from ‘Extreme Fear.’ A week ago it was mid-level fear at 37, and one month ago it was neutral at 53.
So, whenever the market sentiment is possibly descending into panic, investors should be examining their holdings carefully:
Has the company’s long-term earnings power actually deteriorated?
Or is the price decline primarily sentiment-driven?
If structural earnings are damaged—for example by permanently higher energy costs or disrupted supply chains—then exiting may be justified.
But selling a strong company simply because the sector is temporarily unpopular is often a mistake.
Price volatility is not the same as business deterioration.
2. Trim the Fat
If volatility is keeping you awake at night, reduce risk selectively.
Markets often produce relief rallies, sometimes called “dead cat bounces.”
These rallies provide liquidity.
Use them to reduce exposure to your highest-risk assets, particularly those dependent on:
ultra-low interest rates
speculative growth assumptions
investor sentiment rather than earnings
Holding some cash provides two advantages:
First, it reduces portfolio volatility.
Second, it gives you psychological control.
Cash is often underestimated as an asset. In volatile markets it becomes oxygen. On Friday February 27, the moment I sold all equities, I wrote, “Cash is King.”
Risk management and psychological control allow investors to think clearly instead of reacting emotionally.
3. Re-Evaluate Your “Disaster Hedges”
Many investors hold assets intended to protect against systemic crises:
precious metals
cryptocurrencies
energy stocks
Depending on your beliefs, these can serve legitimate roles.
But investors should ask a simple question:
Is this speculation or insurance?
Gold and silver bullion require secure storage and liquidity access unless you buy precious metal bullion-linked securities, some of which afford little protection in a worst-case scenario.
Cryptocurrencies depend on electricity, networks, and functioning exchanges. When the power fails, you have no hedge because you have no assets.
Energy stocks remain equities and therefore subject to extreme market volatility. If you absolutely must sell after the price has temporarily plunged, you have lost wealth, not protected it.
Understanding the operational risks of hedges is just as important as understanding stocks.
The Real Objective: Staying Power
The months ahead are likely to remain volatile.
The probability of a full-scale financial panic may be low. Maybe not.
But the consequences would be severe enough that investors must respect the possibility.
That means avoiding two common mistakes:
ignoring risk entirely
overreacting emotionally
The objective right now is not to hit a home run.
The objective is staying power.
By restraining emotion, trimming speculative excess, and maintaining liquidity, investors ensure that when the geopolitical fog eventually lifts—and it always does—their capital remains intact or at a minimum the losses are relatively minor.
Markets reward those who survive uncertainty.
And survival, in investing, is typically the most underappreciated strategy of all.
In closing, I need to say that even if markets eventually adjust to today’s geopolitical risk, investors face another problem that is even harder to navigate: the dependability of US government data used to interpret the economy itself. I will cover that topic tomorrow.
Part II is titled: The Data Crisis -- Why Investors Are Losing Visibility Into the Economy