War is not news, but an asset repricing machine.

Author: Chen Mingkun, Macro Observation

When people watch war, the first thing they see is the news.

Macro investors, on the other hand, often don't focus on the news itself, but rather on the changing asset rankings.

Over the past month, as war has reignited in the Middle East, I've been sitting at my desk in Tsinghua University's Zijing Garden, repeatedly reviewing past conflicts and asset evolution in modern warfare, and I'm increasingly certain of one thing:

What war changes first is often not the world order, but the asset allocation.

In my view, when studying war and assets, the most important thing is not stance, emotion, or the struggle for interpretation. What truly matters is:

Break down the war into variables, translate those variables into prices, and then translate those prices into positions.

Therefore, the more important question than "what to buy if war breaks out" is actually:

When war breaks out, what will the market reassess first?

This article is for serious traders. It's not for spectators, nor for those who want to hear "what to buy during a war."

If, when the next major upheaval strikes, you can be less of a herd mentality and more of a critical observer; less driven by emotion and more by practical methods—then this article will have been worthwhile.

I. The impact of war on assets is not a single answer, but rather four pathways.

To summarize, the impact of war on assets doesn't present a single, definitive answer, but rather four entirely different transmission paths:

• The first type is energy-transportation warfare.

The market trades first on crude oil, shipping, insurance, and supply disruption risks.

• The second type is risk-preference conflict.

The market trades first on volatility, risk appetite, deleveraging, and risk aversion.

• The third type is sanctions-payment war.

The market primarily functions as a transaction payment, clearing, financing, cross-border settlement, and financial intermediation platform.

• The fourth type is supply chain-entity conflict.

The market is first ranked by transaction costs, inventory, delivery cycle, profit margin, and industry.

For investors, the most important thing is not to know all the answers, but to quickly identify the variable that will be revalued first amidst the market noise.

I call it: first priority variable.

Whoever grasps the first priority variable will find it easier to understand the subsequent price path.

Making hasty conclusions about wartime assets often leads to being punished by the market.

If we were to condense this framework into a single, easy-to-remember sentence, it would be:

• Energy-transportation type, let's look at crude oil first;

• For risk-averse investors, volatility should be considered first.

• Sanctions—for payment-related cases, first examine settlement eligibility;

• For supply chains—physical entities—start by looking at the profit and loss statement.

It should be noted that these four causal chains are not exhaustive, but rather the entry points.

The impact of war on assets often spreads along longer, finer, and more complex chains. For example, how will the current conflict between the US, Israel, and Iran affect food prices six months from now? Natural gas affects fertilizers, fertilizers affect food, and food then affects inflation and the assets of vulnerable nations—this same path is equally effective.

What I want to offer is not a fixed answer, but a macro-level observation method: enabling every market participant to build their own causal chain based on it.

When war breaks out, which variable will become the market's primary language?

II. Four viewpoints most easily misjudged during wartime

Before diving into the specific analysis, I'd like to explain the underlying ideas for this part:

"Falsifiability".

I don't believe in vaguely correct macroeconomic judgments that can never be applied to prices and positions.

The real significance of war studies lies in putting judgments into the market and subjecting them to scrutiny.

Meaningful research conclusions must be falsifiable.

Past events are used to confirm or refute judgments about the past; future profits or losses are used to confirm or refute judgments about the present (the statement is harsh, but it is the truth).

As war escalates, several common phrases will almost immediately appear in the market:

The problem with these statements is not that they are necessarily wrong.

The problem lies in the fact that they are too fast, too orderly, and too much like common sense.

The underlying principle of this kind of thinking is "marking the boat to find the sword." War does not bring about a single direction, but rather a series of pricing processes with different rhythms, levels, and causal logics.

Therefore, before delving into the dynamics of war assets, these most easily misjudged intuitions must be cleared away.

01 | Is it right to buy gold during wartime?

Gold is certainly one of the most important assets to watch during wartime.

If the formula "war = rising gold prices" is reliable, then gold prices in different war scenarios should at least generally move in a similar direction.

But historical prices are not like that.

Words that are easy to say are often the easiest to hinder thinking.

The Kosovo War of 1999 serves as a good counterexample. High-intensity conflict alone is not sufficient to automatically lead to a one-sided strengthening of gold prices.

The 2003 Iraq War revealed another layer of structure: gold was more likely bought up during the escalating war anticipation phase, and then fell and fluctuated after the war officially began.

Rigobon and Sack's research on the risks of the Iraq War also supports this: when the risk of war rises, oil prices, stock prices, US Treasury yields, credit spreads, and the US dollar all react significantly, but gold does not show the same robust statistical response.

What's truly worth remembering isn't a particular year, but a more important fact:

Gold trading often involves not the war itself, but rather the anticipation of war.

A more accurate statement is not "buying gold during wartime," but rather:

Gold is often a priority asset to watch during wartime, but it is not a mechanical bullish button in wartime.

02 | Is Bitcoin a safe-haven asset?

Simply categorizing BTC as a "safe-haven asset" is not rigorous enough.

If war were to inevitably cause Bitcoin (BTC) to rise, then its performance across different war scenarios should at least be relatively consistent. However, from the Russia-Ukraine conflict and the Israel-Kazakhstan conflict to the recent escalation in the Middle East, this has not been the case: sometimes it falls, sometimes it strengthens, and sometimes it falls first and then stabilizes.

This is enough to illustrate:

War is not a direct cause of BTC price fluctuations.

If the market's initial trading activity reflects liquidity contraction, risk aversion, and deleveraging, BTC tends to resemble a high-volatility, risky asset rather than a safe-haven asset. This is because in such scenarios, the market typically sells high-volatility, high-beta, and readily liquidated assets first.

In other words, often war doesn't lead the market to "buy it as a safe haven," but rather it leads the market to reduce its holdings of all highly volatile assets.

In this scenario, it's more like a risky technology asset than a safe-haven asset.

But this does not mean that it has no special characteristics.

The biggest difference between it and gold is that it is not only a trading asset, but also a digital asset that can be transferred across borders, operates around the clock, and does not rely on a single banking system.

Therefore, a more accurate question is not "Will BTC become a safe haven?", but rather:

BTC is not a mechanical safe-haven asset in war.

It will be traded in different phases of war as a risky asset, a liquid asset, or an alternative settlement tool.

War does not directly determine its rise or fall.

What war truly determines is which attribute of a thing the market is more willing to trade at that moment.

03 | Will oil prices rise and stocks necessarily fall?

This is the easiest sentence to say in war studies.

In the event of conflict in the Middle East, oil prices often react first, which is true. This is because the Middle East faces not just ordinary risks, but the very nature of energy transportation. EIA data makes this clear: in 2024, approximately 20 million barrels of oil were transported through the Strait of Hormuz per day, equivalent to about 20% of global liquid petroleum consumption; roughly 20% of global LNG trade also passes through here. As soon as the market begins to worry about this passage, crude oil prices will naturally be driven up first.

The problem is that rising oil prices do not necessarily mean falling stocks.

The history of the Gulf War teaches us that "rising oil prices and falling stocks" can be the first-stage reaction; however, as the situation becomes clearer and the worst-case scenario does not continue to spread, the market will subsequently recover from the trading risks, and the stock market will rebound accordingly.

The Libyan conflict offers a different example: it is closer to the "oil and stock market not being mutually exclusive." "Oil prices rising while stock prices fall" is not the true logic of war.

While the Gulf War and the Libyan War may seem relatively distant, the Iranian attack on Israel in 2024 provides a more immediate example. Crude oil initially surged, and between the outbreak and the end of the conflict, "oil fell, stocks fell"; subsequently, the S&P 500 did not experience a systemic decline.

In their research on the Iraq War, Rigobon and Sack also found that when the risk of war increased, it wasn't just oil that moved; rather, oil prices, stock prices, US Treasury yields, credit spreads, and the US dollar all moved together. In other words, the market wasn't just trading oil, but simultaneously trading growth, inflation, safe-haven assets, and financing conditions.

Therefore, the real key issue is not whether oil prices have risen or not, but the following three things:

First, will this energy shock be short-term or long-term?

Second, will it lead to medium-term inflation expectations?

Third, will the central bank rewrite the interest rate path?

Therefore, a more accurate statement is not "oil prices rise while stocks fall," but rather:

Rising oil prices often mark the beginning of war pricing; how the stock market fares depends on whether this shock will further reshape growth, inflation, and interest rates.

04 | Does benefiting from war guarantee profits for military stocks?

The biggest problem with the statement "war benefits the military industry" is not that it is wrong, but that it is too easy for people to mistakenly believe that they have figured it out.

Logically, it makes sense:

As tensions rise and security issues escalate, military spending expectations are revised upwards, opening up room for potential orders, making the military industry seem like a natural beneficiary.

But the market is not that simple.

Benefiting the industry does not necessarily mean that the stock price will rise immediately;

A stock price increase does not necessarily mean it will outperform the market.

After the full-scale invasion of the Russia-Ukraine war truly broke out, the ITA (Index Trader Index) did not strengthen relative to the S&P 500; rather, it weakened. In other words, at the moment the war began, the market did not immediately trade based on the "military sector benefits" theme. It first traded on a much larger force: risk appetite, liquidity, and macroeconomic uncertainty.

Therefore, a more accurate statement is not "war benefits the military industry, so just buy military products," but rather:

War can elevate the narrative of the military industry, but at the point of outbreak, what is priced by the market first is often not orders, but risk appetite.

Whether the defense industry can outperform others has never depended solely on whether the logic holds true.

It also depends on valuation, expectation gap, and which layer of variables the market trades on first.

The most dangerous thing in war is often not the lack of opinions.

Instead, they form opinions too quickly.

III. The real question: If war comes, what will be the first thing the market reassesses?

After dissecting these misjudgments, the real problem emerges:

War is not a single variable that directly determines the rise and fall of assets; it is more like a trigger.

What truly determines how the market reacts is not just the conflict itself.

Rather, it is the type of war, the macroeconomic cycle, the difference in expectations for events, and most importantly, the first priority variable.

Therefore, the question is no longer "what are the advantages and disadvantages of war," but rather:

Which language will the market use to price it first?

Next, we will not discuss emotional judgments, but rather four war dynamics that truly enter asset pricing.

IV. Four Types of War Dynamics: To Understand War, First Identify Which Type It Belongs To

To understand war, one cannot look at the battlefield itself alone.

More importantly, it's about determining which layer of variables it modifies first.

01 | Energy-Transportation Warfare

Why is crude oil always the first commodity the market reacts to?

The most likely scenario to quickly put the market into a "pricing state" is an energy-transportation war.

The common characteristic of these conflicts lies not in their severity, but in the fact that they often strike at the most critical upstream sectors of the global economy.

Oil-producing regions, straits, tankers, ports, shipping insurance, and energy transport routes.

Once these positions are threatened, the market's first revaluation is often not of the stock market, not of gold, and not even of macroeconomic growth itself, but rather of positions closer to the upstream of the physical supply side:

Crude oil and transportation risks.

Crude oil always reacts first to price movements not because it is "naturally sensitive," but because of its unique position in the modern economic system. It is both a fundamental input to the industrial system and an upstream variable in the inflation chain.

As soon as the market begins to suspect that transportation will be disrupted, insurance prices will rise, routes will be rerouted, and supply will contract, crude oil will be the first commodity to be priced.

In energy-transportation warfare, crude oil is not a side effect, but rather the most direct carrier of risk.

But here is a particularly important detail:

Crude oil often moves first, but moving first does not mean it will continue to rise.

The Gulf War is one of the most typical examples. During the preparation period for the war, crude oil prices had already risen significantly; after the outbreak of the war, oil prices continued to surge; but as the situation became clearer, prices subsequently fell rapidly.

The Iraq War further revealed another layer of structure. In this case, crude oil and gold had already reacted during the escalation of war expectations; once the war officially began, the market was closer to "buying the rumor, selling the fact." This means that although crude oil is usually the primary variable in energy-transportation wars, its price path still depends heavily on two things: first, whether the market has already fully priced in the event; and second, whether the worst-case scenario actually materializes after the event.

Therefore, to understand this type of war, one cannot simply look at whether "oil prices have risen or not," but must consider the two layers of context in which it takes place.

The first layer is the expectation gap. If the event itself exceeds expectations, the pulse of crude oil is usually stronger; if the event itself has already been discussed repeatedly and the market has already traded in advance, then even if the conflict officially breaks out, oil prices may quickly turn into fluctuations, or even see a sell-on-the-fact scenario.

Iran's direct attack on Israel is a prime example: risks do not intrude into the market unprepared, so while assets experience a pulse, it does not unconditionally extend into a sustained revaluation.

The second layer is the macroeconomic cycle. If this occurs in an environment of low inflation and ample policy space, the market is more likely to interpret it as a temporary disturbance.

If this occurs in an environment of high inflation and already tight monetary policy, the market will immediately ask: Will this round of oil price increases lead to medium-term inflation expectations? Will it delay a policy shift?

This is also the most important difference between energy-transportation warfare and other types of warfare. Its impact begins in the physical world and propagates along a chain into the financial markets:

Energy transportation threatened

→ Crude oil was revalued first

→ Market assessment: Is the impact short-term or sustained?

→ If inflation expectations are met, then the interest rate path will be reassessed.

→ Further rearrangement of stock and bond valuation systems

Therefore, the most important lesson to remember in energy-transportation warfare is not that "oil prices will definitely rise."

Rather, crude oil is often the first upstream variable to be traded in the market.

However, the fact that crude oil moved first does not mean that the shock will automatically evolve into a long-term trend.

What truly determines the subsequent path is never the price of oil itself.

The key question is whether oil prices can continue to be influenced by inflation expectations, discount rates, and valuation systems.

In this type of war logic, the fact that crude oil moves first is not a conclusion, but rather the starting point for financial transmission.

02 | Risk-Preference Warfare

"What is often revalued by the market first is not crude oil, but risk appetite."

The first thing these kinds of wars rewrite is not the physical constraints of the macroscopic world.

Rather, it refers to the market's risk tolerance.

If a conflict does not directly threaten oil-producing regions, straits, tanker transport, or critical energy infrastructure, then the market will often reassess not supply constraints, but risk appetite itself.

The primary driving force behind these kinds of wars is not whether energy supplies will run out, but rather whether uncertainty will suddenly rise and whether risky assets will still be worth holding.

Therefore, the first wave of transmission in this type of war is usually not "oil first," but rather:

Conflict escalation

→ Increased uncertainty

→ Risk appetite decline

→ Stock market under pressure, volatility rises

→ Safe-haven funds flow into the US dollar and gold, etc.

→ If there are no further shocks to energy and inflation, the market will then enter a recovery phase.

This causal chain explains a very important phenomenon:

Why is it that after the outbreak of some wars, the stock market falls first, and gold also reacts, but prices do not automatically evolve into a longer-term unilateral trend? This is because these kinds of wars primarily affect the willingness to hold positions, rather than deeper factors such as supply, inflation, and discount rates.

The IMF's research on geopolitical risks also points out that major military conflicts can significantly impact stock and options market pricing through increased risk aversion, tighter financial conditions, and the spread of uncertainty. In other words, at this stage, the market is not primarily trading on a shortage of a particular commodity, but rather on a repricing of future volatility and tail risks. The first round of decline is more of a risk discount than a downward shift in the long-term valuation center. Only when the risk appetite shock continues to transmit downwards, reaching deeper macroeconomic variables, will this kind of war sentiment pulse escalate into a more persistent asset rearrangement.

Therefore, the more accurate conclusion is not "When war comes, gold prices will rise," nor "When war comes, the stock market will fall," but rather:

In this type of war logic, the market usually re-evaluates volatility and risky assets first; the first round of decline is more of a risk discount and does not automatically constitute a long-term trend.

03 | Sanctions - Payment-Based Warfare

"In payment-driven wars, what changes first is not price, but eligibility."

The core of sanctions—a payment-based war—is not the price of a single commodity, but the accessibility of cross-border financial systems.

When a conflict escalates to sanctions, the market's first reassessment is often not just of supply, but also of: payments, clearing, reserves, financing, and counterparty credit.

The Russia-Ukraine war is the most typical example of this type. After 2022, the EU successively imposed financial sanctions on Russia, including restricting Russia's access to EU capital and financial markets, prohibiting transactions with the Central Bank of Russia, removing several Russian banks from SWIFT, and freezing or imposing "untouchable" arrangements on some Russian assets. The US Treasury Department's OFAC also prohibited Americans from conducting related transactions with the Central Bank of Russia, the National Wealth Fund, and the Ministry of Finance through Directive 4. At this point, the market is no longer just facing the question of "whether oil supplies will be cut off," but a deeper issue: whether the existing cross-border financial chain can still operate normally.

The typical transmission of this type of war is not from price directly to price.

Instead, the focus shifts from qualifications to price:

Sanctions escalation

→ Payment and settlement obstructed

→ Tightening of foreign exchange and financing conditions

→ Increased counterparty risk and liquidity appetite

→ Risky assets under pressure, volatility rises

→ The US dollar, US Treasury bonds, crude oil, and some alternative assets to the system are being repriced.

Therefore, this type of shock differs fundamentally from energy-transportation warfare:

Energy shocks primarily alter supply prices.

The first thing that the payment disruption has rewritten is the settlement eligibility.

Once settlement eligibility begins to fluctuate, asset rankings will rapidly diverge. Assets heavily reliant on the global banking system, cross-border financing, and mainstream clearing networks are more likely to face discounts; while emerging digital settlement tools that still possess the ability to transfer, hold, or settle in a payment-constrained environment are more likely to receive additional attention.

The IMF's 2025 Global Financial Stability Report clearly concludes that major geopolitical risk events, especially military conflicts, will transmit to stock, sovereign risk premium, exchange rate, and commodity markets through increased risk aversion, tighter financial conditions, and disruptions to trade and financial links. Simultaneously, major events may significantly depress stock prices and raise sovereign risk premiums. For markets, this means that the focus of sanctions-payment wars is not "whether a certain asset will rise," but rather whether the financial intermediation function can still operate smoothly.

The IMF's research on geopolitical risks also illustrates this point. Major military conflicts not only depress equities and raise sovereign risk premiums through increased risk aversion and tightening financial conditions, but also spill over to third countries through trade and financial links.

This is why the impact of sanctions often spreads further than the battlefield itself.

A more accurate statement about new on-chain settlement tools is not that "they are inherently risk-averse," but rather that: when traditional payment frictions, capital flow constraints, and cross-border settlement barriers increase, the market will reassess their attributes as non-bank, cross-border, 24/7 settlement channels. What the market is truly re-evaluating here is not the narrative of some alternative value store itself, but the institutional value of alternative settlement channels.

If the question in an energy-transportation war is "Can the goods still get through?", then...

So, the question posed by sanctions—a form of payment-based warfare—is:

Will the money still be able to be transferred?

04 | Supply Chain - Physical Conflict

"The market trades profit statements first, not risk aversion narratives."

There is another type of conflict that neither directly chokes the global energy supply nor immediately rewrites the international payment system, but still significantly alters asset pricing.

This is: supply chain-physical conflict.

The core of this type of conflict is not whether "the world will immediately enter a state of full-scale risk aversion," but whether the production, transportation, inventory, and delivery systems will continue to become distorted.

What it rewrites first is often not crude oil, gold, or global risk appetite itself, but rather variables that are closer to the level of business operations:

Freight costs, insurance, delivery time, inventory safety margin, profit margin, and capital expenditure expectations.

The most typical example is the Red Sea conflict. The IMF pointed out that in the first two months of 2024, the volume of trade through the Suez Canal decreased by about 50% year-on-year, and the attacks forced a large number of ships to detour around the Cape of Good Hope, disrupting the supply chain; UNCTAD also pointed out that by the first half of February 2024, the tonnage of containers passing through the Suez Canal had decreased by 82%, with a large amount of capacity being diverted to the southern tip of Africa.

In the face of such shocks, the first thing the market trades is not "buying safe havens," but rather: whose costs will rise; whose deliveries will slow down; whose profit margins will be damaged first; whose orders will shift; and whose alternative supply capacity will be revalued.

Its transmission chain is usually not a risk-avoidance line, but a chain that is closer to the real economy:

Regional conflict escalation

→ Shipping and supply disruptions

→ Longer delivery cycles, inventory strategy adjustments

→ Rising costs, pressure on profit margins, and order differentiation

→ Reordering sectors within the stock market, rather than a uniform, comprehensive risk aversion.

The most common misjudgment in this type of war is that many people subconsciously equate "conflict" directly with "risk avoidance".

However, supply chain-entity conflicts do not often initially create risky transactions with a unified direction across the entire market.

Its more common outcome is:

Sectoral differentiation, profit differentiation, and regional differentiation.

This is why the impact of this type of war on assets is often slower, but not necessarily smaller. Its real rewriting typically occurs on three levels:

First, there's the cost layer. Shipping, insurance, warehousing, parts procurement, and alternative transportation routes all contribute to increased costs.

Second, there's the inventory layer. Companies often shift from prioritizing efficiency to prioritizing resilience.

Third, there's the profitability level. Can the company still deliver profits at its original pace? At this stage, the conflict begins to extend to profit forecasting and valuation models.

Therefore, asset performance during such wars is usually not a collective retreat across asset classes, but rather a structural repricing within the stock market. Companies more heavily reliant on single-region production capacity, single-route transportation, single components, or high-turnover, low-inventory models are often more severely impacted; while those that benefit relatively more are likely to be companies and sectors with alternative production capacity, regionally diversified layouts, stronger pricing power, or the ability to absorb order migration.

Therefore, the more accurate conclusion for this type of war is not:

"When conflict arises, buy safe havens."

Instead:

When war primarily impacts production, transportation, inventory, and delivery systems, market revaluation often focuses not on comprehensive risk aversion, but rather on costs, profit margins, and industry rankings.

If energy shocks primarily alter prices, then...

The first thing that payment-related shocks rewrite is eligibility.

So, the first thing that supply chain shocks will rewrite is:

Income statement.

V. From Judgment to Positioning: An Investment Methodology in Wartime

The preceding discussion focused on how war influences asset pricing.

But for investors, the truly important question doesn't end here.

Instead, take another step forward:

How to translate judgment into position size.

The most common misconception about war is that it presents itself as a huge directional opportunity.

However, a careful look at history reveals that wars do not consistently produce replicable outcomes.

What it produces more steadily is actually: fluctuations, mismatches, and the breakdown of correlations.

Therefore, in wartime investment, the truly important thing is not to gamble on the direction, but to first identify what variables the market is actually trading:

This variable is used to create short-term pulses.

It will continue to spread along the asset chain;

Which prices are merely emotional reactions?

Which shocks will solidify into the main themes in the medium term?

If I were to break this down into more specific and actionable steps, I would break it down into four steps.

The first step is always to identify the first-priority variable.

When war breaks out, the market doesn't trade all the information simultaneously. It always seizes on one variable first and pushes it to the center of pricing: sometimes it's crude oil, sometimes risk appetite, sometimes the payment system, sometimes inventory and profit and loss statements. Many people try to make a general judgment about the entire war right away, but this is usually too early and too crude. The truly effective approach is to first make a judgment:

What is the market trading right now—supply, risk appetite, payment frictions, or profit and loss statements?

If you identify the first priority variable correctly, you'll have direction for subsequent positions; if you identify it incorrectly, even if the subsequent narrative is complete, the trading will likely go wrong.

The second step is to complete preparations before the war, rather than hastily building up warehouses during the war.

Truly good war deals don't begin the moment the conflict fully erupts. Many high-risk, high-reward opportunities arise before the event gains public attention. By the time the market starts discussing it, the cheapest price window has usually already passed.

Therefore, before war, it is even more important to: study the borders, prepare tools, identify vulnerabilities, and reserve contingency plans. Don't wait until the fighting starts to decide what weapons to use.

The third step is to switch trading methods during wartime and shift the focus to pricing discrepancies.

After the outbreak of war, explanations are plentiful, but judgments about prices are truly scarce. There is no set asset template that can be mechanically applied to war; on the contrary, the only thing closer to certainty is that it will create dramatic changes.

The initial market scenario is often this: some assets overreact, some underreact, and others are simply swept along by emotions. In other words, war doesn't necessarily bring a clear direction; more often, it amplifies misallocations in the short term.

This is why war is not necessarily a good time to gamble on a stable direction.

However, they are often more suitable for arbitrage and structured trading.

Because when the market changes dramatically, what is often disrupted first is not one's own viewpoint.

Rather, it is the originally stable order between prices:

Spot and derivatives will be misaligned

Related assets under the same logic will be misaligned.

The narrative of risk aversion and the actual pricing will be misaligned.

Short-term sentiment and its transmission in the medium term can also be misaligned.

The most important thing at this stage is not to make statements.

Instead, it identifies: which prices are just emotional impulses, which misalignments will quickly revert to their previous levels, which shocks will solidify into medium-term trends, and which price spreads, basis spreads, and correlation gaps are worth trading.

This part relies heavily on arbitrage intuition and accumulated experience.

Those who have carefully observed historical war patterns and observed the unusual movements in certain assets triggered by war are often able to deploy and execute strategies around these movements more quickly. For example, in the 2025 silver short squeeze, astute traders could quickly enter the silver arbitrage path; similarly, in the recent gold price fluctuations caused by the US-Israel-Iran conflict, astute traders are more likely to find pricing mismatches among different gold derivatives.

These kinds of opportunities often come quickly and disappear quickly.

For strong traders, it is a window;

For weak traders, it is often just a fleeting fluctuation.

The fourth step is to shift the focus of trading from the event itself to its transmission after the crisis has escalated.

In the early stages of a war, the market trades on the event itself; as the war continues to escalate, the market trades on the resulting consequences. What truly determines whether a war can evolve from a short-term impulsive event into a medium-term main event is not the quantity of news, but whether the impact continues to penetrate deeper variables: whether it enters inflation expectations, whether it enters the discount rate, whether it enters corporate profit statements, and whether it enters settlement and financing conditions.

If these variables haven't actually changed, then the first round of volatility often resembles a risk discount rather than a long-term revaluation; however, if these variables do begin to change, the war will no longer be just news, but will begin to become part of the trend. At this stage, the trading logic must also shift:

Judging from event impulses to trends

Shifting from news-driven to macro-level themes.

Macro hedging implies flexible approaches. When faced with different macroeconomic phenomena, different types of warfare, and different transmission paths, it is necessary to flexibly use different tools and enter different capital battlefields.

Ultimately, position size is not a byproduct of emotions, but a financial expression of one's thoughts.

War amplifies fluctuations and also magnifies errors in judgment.

The significance of position sizing is to allow the logic to be tested by the market.

Opinions must correspond to variables;

The judgment must correspond to the corresponding tool;

The logic must ultimately come into play in the allocation of funds.

This is also my understanding of the methodology of war investment:

Before the war, examine the logic; during the war, identify mismatches; after the war, examine the transmission.

First look at the variables, then the price, and finally the position size.

Because position size allows ideas to be falsified.

Investing is the shortest straight-line distance from ideas to wealth.