War, Volatility, and Markets

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As I’ve shared many times in the past:

Wealth Potion isn’t about politics. It’s about helping you grow your wealth.

That said, when you invest your money, politics absolutely impact your wealth. Especially geopolitics.

You’ve seen the headlines. There is war brewing in the Middle East, and now the USA is getting involved.

Today, we’ll look at this conflict and how various markets have reacted, specifically the US dollar, gold, oil, stocks (the S&P 500), and Bitcoin; so that you can learn:

• How various assets typically respond during times of chaos

• Why you shouldn’t panic sell (or panic buy) when investing

• What to watch for in the coming weeks and months

As always, you can also watch this week’s article on YouTube:

Let’s dive in.

What’s Happening in Iran — The TL;DR:

Before we get into the market reaction, we need a quick primer on what’s going on.

Iran has been reportedly enriching uranium beyond the levels required for civilian use (nuclear energy). Israel and USA claim to have intel that Iran is getting close to developing a nuclear bomb. Israel decided to take preemptive action, setting off a chain of events:

• 🟢 June 13: Israel launches a surprise airstrike on Iranian nuclear facilities, political figures, and nuclear scientists.

• June 19: Iran retaliates with missile strikes of its own on several Israeli cities.

• June 22: The United States bombed Iranian nuclear facilities, claiming severe structural damage.

• 🔴 June 24: The U.S. publicly urges both sides to agree to a ceasefire, which appears to be holding for now.

Ok, now we’re all caught up. So how did markets react?

And what can we learn from this moment that could help us prepare for future crises?

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🟩 Flight to Safety: The US Dollar and Gold

When the world gets nervous, capital runs away from risk and toward safety. Safety usually means the US dollar and gold.

As we’ve discussed in the past, the US dollar is the world’s reserve currency. It is considered the safest currency in the world, despite it’s gradual decline in value over time. And you could see that in the DXY index, which held firm even as risk assets pulled back.

Then there’s gold, one the most reliable fear hedges. Gold hit approached all time high and rose above $3,400/oz as tensions rose. This is on top of an already growing trend of gold repricing to higher highs due to broad geopolitical risk these past few years (especially BRICS nations looking to reduce their reliance on the US dollar).

Bottom Line:

• The dollar could stay strong in the short term as capital seeks safety.

• But that strength is masking deeper issues: US debt is ballooning, and rate cuts are still expected by year-end.

• Gold is 2x benefiting from both fear and fiat skepticism, a rare combo.

🟧 Geopolitical Risk: Oil and Stocks

Now we have to zoom in a bit.

When there is conflict near oil-producing regions (like the Middle East), this often causes a spike in oil prices.

Oil is a particularly important commodity because it can directly impact inflation via gas and energy prices.

So when tensions rise, oil tends to spike, and this could signal future inflation risk.

Interestingly, oil prices have calmed back down to pre-June 13th levels.

Now, let’s shift to stocks.

The stock market, as represented by the SP500 is generally seen as a risk asset. In other words, investors understand that holding stocks carry some meaningful level of risk.

So what happened?

The S&P 500 dipped and then recovered after each major strike but overall, it stayed resilient. And interestingly, post-ceasefire, the SP500 has jumped to new highs compared to prior to the conflict.

This brings us to an important concept of something being “priced in”.

Investors are constantly weighing market risks. And when investors think there is a probability of something bad happening, they often invest accordingly.

• If the probability of risk rises, they will sell off risk assets, like stocks.

• If that probability of risk decreases, they will buy more risk assets.

This is why oftentimes, when there is a major news headline that is negative in nature, the stock market doesn’t plummet. And sometimes, it even does the opposite of what you might expect!

That’s because investors have already priced in that risk, and sometimes, the real event turns out to be not as negative as they predicted.

Bottom Line:

Oil reacted strongly because of the direct impact of the conflict on the oil market. The stock market however was already pricing in some form of risk, so there wasn’t a huge hit to stock prices, nor was there a huge rally when the ceasefire was announced.

As you’ve probably noticed, as we get into more complex asset classes, the reactions from the market are becoming less obvious.

🎲 The Wild Card: Bitcoin

And that takes us to Bitcoin.

Some people believe Bitcoin is digital gold, and therefore should react like a flight to safety.

Others believe Bitcoin is a risk asset, and therefore should react more like the SP500.

As we’ve covered on Wealth Potion before, Bitcoin is a bit of both. And so it’s behavior can be very unpredictable (and volatile).

Note that while other assets swung a couple of percent, Bitcoin’s swings are closer to 10%.

If Bitcoin isn’t your cup of tea, that’s totally fine. I’m not going to convince you with a single newsletter or YouTube video.

Nevertheless, it is worth pointing out that Bitcoin is outperforming the SP500 in 2025 so far…

🧭 Key Takeaways: Keep Calm and Compound On

When there’s a big news headline that causes panic, it’s very common for beginner investors to want to take action.

Here are some of those actions, and why they’re not ideal:

❌ Panic Sell: Perhaps the most natural reaction is to see news about war, and to sell your stocks because the war could get worse. The problem? The risk of war is already priced in, and a quick recovery could leave you on the sidelines.

❌ Panic Buy: A clever investor may see the initial dip and think “I’ll buy here because everyone else is selling!”, which can work… but if you time it wrong, you could be “catching a falling knife”, and it could dip even more.

Instead, experienced investors do the following:

✅ Stick with your thesis — unless new information changes their underlying investment strategy, they stick with what they know to be true

✅ Don’t overreact — experienced investors know that news headlines (and the reaction to them) are temporarily, and emotions are deceiving

This war might escalate. Or it might not.

Trying to time the market is not like betting on a horse at the racetrack. It’s not good enough to predict the correct outcome — you have to predict the outcome better than the market is already pricing in that outcome.

I choose to stick with what I know. I invest passively, I invest in assets that I believe in over the long-run, and I let compounding grow my wealth over time.

To your prosperity,

Brandon @ Wealth Potion 🧪

_{PS. I’m putting together a Wealth Potion Quest Log - a free resource for tracking and gamifying your progress toward financial freedom. Reply to this email if you’d like to get a sneak-peek and provide feedback on an early draft!}