When conflict breaks out in the Middle East, there's a well-worn script that most investors are told to follow…
Sell your tech stocks and rotate into consumer staples and healthcare.
You hear the tired old trope…
Own things people need regardless of what's happening in the world.
You know, things like food, medicine and toothpaste.
It worked in 2022 when Russia invaded Ukraine and it's worked in various forms for decades.
Only this time it hasn't.
Since the latest Middle East escalation began, the healthcare sector is down roughly 4% while consumer staples is down about 5%.
Energy surged, as expected. But the so-called safe havens sold off.
Meaning that the script broke.
The Wall Street Journal ran a piece on this recently, to show it goes deeper than merely blaming high oil prices.
Because as I’ve discussed for the best part of the last 2 years, many of these household-name businesses are carrying structural problems that have nothing to do with oil prices or conflict.
In food, branded manufacturers are losing shelf space to store brands.
In healthcare, the big managed-care companies are caught between government pressure to cut spending and a surge in medical costs going the other direction.
The war didn't cause those problems, but it did shine a light on them at the worst possible moment.
This is the part of defensive investing that most people don't think through clearly enough.
The logic of rotating into so-called safe sectors sounds correct… because yes, people do always buy food and medicine. It’s kind of answer ChatGPT would give you if you asked it for portfolio advice right now.
But these sectors only hold up when they are genuinely healthy and reasonably valued.
So when they arrive at a crisis already carrying structural headwinds… already crowded with nervous money from the weeks before… they don't absorb the shock at all
And for many investors, the exact thing they are running to for protection becomes another source of loss.
This is exactly why sector rotation is a poor substitute for actual portfolio protection.
Which is why real hedging (the kind done by multi-billion dollar institutions), works regardless of which sector is in or out of favour.
It works by having a position that structurally benefits when markets fall, independent of why they're falling.
The hedging protocol we walk students through — backtested over 40 years, with returns roughly 80% above SPY. All while eliminating catastrophic drawdowns
The protocol doesn't care whether the selloff is caused by a war… a rate decision… or an AI narrative unravelling.
In fact, it's bulletproof mechanism that keeps your capital intact when everything else is repricing downward.
And while that protection is running underneath, the Wheel Strategy generates income on top.
The March 18th cohort is the next opportunity to get this built properly inside your account.
Oliver