The Geopolitical Catalyst: A US-Iran Memorandum of Understanding
The dominant market story is the prospect of a US-Iran memorandum of understanding, with the signing expected in Geneva on Friday. The market reaction has been a textbook one: oil prices pulled back while equities surged, producing a record on the Dow and, at the moment, a record on the Russell as well. This is the kind of risk-on response that markets reliably stage whenever a de-escalation in the Middle East appears imminent.
The seasoned view here is one of measured skepticism. By this reckoning, this is the 39th time markets have arrived at this same juncture — the prior 38 episodes of peace talks all produced similar knee-jerk reactions. The dynamic is so familiar that there is "nothing new" about it, and much of the move is probably already priced in. The pattern is always the same: rotate out of the energy sector and into the airline sector, or into anything else that benefits from lower energy prices. The hope is that this time the deal actually sticks, but the outcome won't be known for a couple of days.
Is this round genuinely more credible than the prior attempts? There are reasons to think so — there is talk of releasing the actual text of the agreement this week, talk of a reopening, and for the first time a naval blockade has been moved, all of which distinguish this episode from the many that came before. The trader's response, however, is one of deliberate humility about geopolitics: it is hard enough to figure out the stock market, so the geopolitics are best left "to the geniuses in Washington." Whether it holds remains to be seen, but "this too will come and pass, and life will go on." There are plenty of other things to think about with the market regardless. Still, if the situation can finally be resolved, that would be a very big positive — at a minimum, it is clearly not a negative.
The Broader Market: Healthy Despite the Headlines
A key observation is that the market has been setting new highs in spite of, not because of, the geopolitical backdrop. Across a stretch of persistent geopolitical problems, equities have delivered a remarkable performance. It is true that a couple of high-profile tech stocks have done much of the heavy lifting for the S&P 500 — a huge percentage of the index is concentrated in just a handful of names. But the encouraging detail is that market breadth is positive: the gains have spread out to sectors beyond technology rather than remaining bottled up in the megacaps. On that basis, the market in general is "fine," and a signed peace deal would only add to the constructive picture.
United Airlines and the Energy Pair Trade
United Airlines (UAL) has been one of the best performers on the S&P 500, hitting a fresh 52-week high. It is a featured pick, framed around the pair trade tied to oil. The stock is already up nearly 60% over the past year, which raises the natural question of whether it still has room to run.
The answer is yes, with the self-deprecating caveat that "even a blind squirrel will find an acorn every once in a while." The pair trade has been an obvious one for weeks. The core logic is structural: no sector is more energy-connected than the airlines. Fuel cost is a huge part of their profit-and-loss statement, so rising energy prices are a clear negative for airlines and falling energy prices are a clear positive. That makes the trade attractive in the immediate context of a possible peace deal and lower oil.
But the conviction extends well beyond the short-term oil trade. The airlines are widely hated as a sector — and with good reason, because it is a terrible business. The redeeming factor is consolidation. The US now has essentially only three major airlines left: Delta, United, and American. Anyone who wants exposure to the sector simply does not have many choices. That consolidation is expected to prove very positive for those three companies down the road. So while United is a great pair trade right now, the longer-term thesis is to stay long the airlines generally — and long United in particular.
Canadian Pacific and the Case for the Railroads
Staying within transportation, Canadian Pacific is another long-standing favorite, and it too is sitting at a 52-week high. The investment logic closely mirrors the airline thesis, with one crucial difference: the consolidation in rails is not new — it stretches back 10 and 20 years. The country is now down to essentially four major railroads: CSX, Norfolk Southern, Union Pacific, and Burlington Northern (which Berkshire Hathaway bought in its entirety about a decade ago) — plus Canadian Pacific.
What makes Canadian Pacific especially interesting is its geography. While the other major railroads run essentially north, east, and west, Canadian Pacific runs north and south, reaching deep into Mexico — a route none of the other rails serve. More broadly, the railroads enjoy a great competitive moat for a simple reason: nobody is inventing new railroads. And, notably, this is a business with no exposure to an "AI takeover" — the moat is physical and durable rather than technological and contestable.
Today's full slate of picks, alongside UAL and Canadian Pacific, includes Virtu, Sunbelt, and Zoetis.
How Much to Invest: The Financial Threshold of Pain
On the bigger question of how heavily invested someone should be — fully invested or otherwise — the conviction is total, delivered with humor: "I've only been doing this 64 years, give or take, so clearly I'm a believer."
Should money sitting on the sidelines be put to work? The honest answer is that it depends on the individual. Everyone has a different "financial threshold of pain." Investors need to do what makes them comfortable and what does not keep them up at night worrying about whether the market goes up or down. The right allocation will therefore differ for everyone. That said, the equity markets have historically been a great way to build wealth across generations.
The governing philosophy is long-term buy-and-hold investing, and clients are encouraged to adopt the same approach. Over time, it actually works. The real trick is simply finding where your personal threshold of pain lies. But the bottom line is that you do want exposure to the market: if you were completely out of stocks on Friday and woke up to a peace-deal rally, you missed it. You don't want to be out of the markets if you can help it — "because you miss days like today."
IPOs: OpenAI, Anthropic, and the Lesson of Facebook
On the subject of upcoming high-profile offerings, the focus is deliberately forward-looking rather than dwelling on SpaceX (in which there was no participation). The real interest is in OpenAI and Anthropic — and whether there would be appetite to look at those IPOs as possible investments, especially given a track record of being an early Facebook investor.
The answer is a qualified yes — there would be interest in looking at them — but the approach is patient and disciplined rather than rushing into the offering. The Facebook experience is the instructive template: even with Facebook, there was no participation for the first six months; the stock wasn't bought until six months after the IPO. Perhaps that was luck, since the shares sold off in the interim. But the deeper lesson cuts the other way too: anyone who had bought Facebook on the offering — at roughly $42 a share — and simply held on through the six-month decline would still have ended up a winner. The takeaway is that for a genuinely strong company, entry timing matters far less than the willingness to hold for the long term.