I have been reviewing the last 36 years of financial and geopolitical history, and I just realized something fascinating: capital markets follow a surprisingly predictable script every time a major conflict erupts. It’s no coincidence. It’s the same script that repeated in 1991, 2003, and 2022.

The most interesting thing is that capital doesn’t have a real fear of fire or war. What truly terrifies Wall Street is uncertainty. That unbearable wait before the first cannon shot.

Think of it this way: when Iraq invaded Kuwait in August 1990, oil shot up from $20 to $40 in just two months. Pure panic. The S&P 500 fell nearly 20% between July and October. But here’s the counterintuitive part: on January 17, 1991, when Operation Desert Storm officially began, the market did exactly the opposite of what most expected. Oil plummeted more than 30% that same day. Stocks rose sharply. Uncertainty had dissipated, and that was enough.

This script repeated in 2003 with the Iraq war. Months of diplomatic tension, constant declines, capital fleeing to gold and Treasury bonds. Then, a week before the missiles hit Baghdad, the market bottomed out. On March 20, 2003, when the war actually started, markets interpreted it as “the worst is already priced in.” Four years of a bull market followed.

But 2022 was different. Russia is an energy giant, Ukraine is Europe’s granary. When the conflict broke out, Brent crude temporarily exceeded $130. Gas prices in Europe multiplied. Wheat, nickel, everything hit record highs. And here’s where the script changed: this wasn’t just an emotional war. It was a real, prolonged disruption of global supply chains. It triggered the most severe inflation in 40 years. The Federal Reserve was forced to start the most aggressive rate hike cycle in history. In 2022, stocks and bonds fell together. The Nasdaq dropped more than 30%. There was no V-shaped rebound.

Now, as I see tensions in the Middle East escalating again, I need to think clearly. Is this another emotional script that will resolve quickly? Or is it a fundamental disruption in supply chains that will redefine the global inflation cycle?

The difference is crucial. If the conflict only causes temporary panic, we’ll see the same pattern: initial drop, then a V-shaped recovery. But if it truly interrupts oil flow from the Strait of Hormuz, the script will be much darker. Oil prices will spike, inflation will return, central banks will keep rates high, and risk assets will continue falling for a long time.

What I’ve learned from observing these cycles is that oil is the absolute center of the storm. It controls everything. If prices rise significantly, it threatens the consumer price indices that have just stabilized. Gold always rises initially out of pure emotional panic, but once the situation clears up, it drops quickly. Cryptocurrencies, despite all the “digital gold” narrative, behave more like a highly elastic Nasdaq. Institutions sell the most liquid and risky assets first to raise cash.

For us as ordinary investors, there are three clear lessons from this repeating script:

First, uncertainty is the greatest killer. The sharpest declines almost always happen during the preparation phase, before the war actually begins. Once the first cannon sounds, especially when everything becomes predictable, the market often hits bottom. Wall Street has a saying: “Buy when the cannons sound.”

Second, the commodity trap. Before and at the start of the war, oil and gold spike out of pure panic. But if the conflict doesn’t substantially disrupt physical supply, prices collapse quickly. Blindly following that rise makes you the last buyer for institutions.

Third, distinguish between emotional impact and fundamental disruption. If it’s only emotional, the market recovers quickly. But if it’s a real disruption of key supply chains, the pain period is very prolonged.

My personal strategy right now is simple: increase cash holdings by 20-30% (high-interest dollar deposits, short-term Treasury bonds). Build a small defensive position in physical gold or gold ETFs, maybe 10-15%. Reduce marginal stocks without gains and focus on broad indices like the S&P 500 or leading companies with solid cash flows. For those holding cryptocurrencies, reduce volatile altcoins, keep Bitcoin as a base, and consider dollar stablecoins on regulated platforms.

The absolute red line: never use leverage during uncertain geopolitical times. A ceasefire announcement can cause oil to drop 10% in minutes. With leverage, you could be liquidated before seeing the long-term victory.

And abandon the “capitalize on war” mentality. The information gap is extremely cruel. When you decide to go long because the conflict escalates, Wall Street is already prepared to sell the news.

The reality is that the market script during war is predictable, but only if you understand the difference between emotional panic and real disruption. Capital has no compassion. It prices uncertainty with relentless coldness. Our job is to stay calm, preserve capital, and remember that even in the worst moments, order is always rebuilt from the ruins.