Inside today’s Daily Journal…

The first casualty of any war is the truth.

You cannot rely on what the government will tell you about the war with Iran. The markets are going to be the better barometer of how the war is going. And, according to the markets, the Persian Gulf isn’t going to be open for business any time soon.

Please don’t doubt my patriotism or claim that I hate U.S. President Donald Trump. Neither is correct. My wife and I have spent time with President Trump at Mar-a-Lago. Trump and I have several mutual friends. I supported his candidacy – and I sorely wish he had delivered on his promises of no more foreign wars and a vastly smaller government (DOGE).

I love our country and I hope for the best outcome of this conflict. It would be an incredible step forward for world peace if the terrorists in Iran could finally be vanquished. Unfortunately, hope isn’t a strategy.

I’ll tell you more about my theory of this conflict below.

But first let me explain what the media won’t say about what’s happening to the markets.

On Friday, I provided a strategy for dealing with the inevitable volatility: raise cash. If you want to reduce your portfolio’s volatility, I recommend selling “bonds” (including our property and casualty insurance company stocks) to raise more cash. Additionally, I recommended four stocks to hedge against higher energy prices – Venture Global (VG), Frontline (FRO), APA Corporation (APA), and Glencore (GLNCY).

But this approach only deals with the headline risks: higher energy prices. There’s far more at stake in the Strait of Hormuz than only energy.

How will we solve the helium problem – the most critical and immediate problem of those mentioned above?

Helium is found, in trace amounts, in natural gas production. Most liquefied natural gas (“LNG”) plants simply vent helium into the atmosphere because capturing it is technically difficult and expensive. However, Linde PLC (LIN) has a long-term offtake agreement with Freeport LNG in the United States to recover helium. This facility provides approximately 200 million cubic feet of liquid helium annually, a significant portion of the U.S. domestic requirement.

But there’s a problem. Helium is the “leakiest” element – it escapes almost any container over time. Remember your birthday balloons? They go flat – quickly. Linde commissioned a massive underground salt cavern (salt is impermeable) in Beaumont, Texas, in mid-2025. This can hold 3 billion cubic feet of helium – without leaking.

That’s how we’ll solve the helium problem.

But… whether that will be good enough for Linde shareholders isn’t clear, because it also has substantial operations in the Persian Gulf, which will be disrupted.

A cleaner way to hedge against a longer war is simply buying the chemical producers that are U.S.-based, like Dow (DOW) and LyondellBasell (LYB).

In the gulf, oil gets “cracked” to separate out the chemicals needed to make plastics. But in the U.S., it’s “wet” natural gas that’s the feedstock for petrochemical companies. Ironically, as oil production in places like the Permian Basin increases to capture the much higher oil price, U.S. natural gas prices could actually fall, because of a big increase in “associated” natural gas – gas that’s produced as a byproduct of shale oil fields. This positions Dow and LyondellBasell to see both a big increase to the price of their finished products and a decrease to the cost of their feedstock. As prices for petrochemicals go higher, these two companies with their massive U.S.-based facilities and access to low cost U.S. “wet” natural gas will see a huge rise in profit margins.

If the Persian Gulf remains shut in for a year or more, the single biggest beneficiary could be CF Industries (CF), which makes nitrogen-based fertilizer. Its Donaldsonville, Louisiana, nitrogen complex is the largest facility of its kind in the world. As I mentioned above, approximately one-third of the world’s traded urea (a key nitrogen fertilizer) flows through the Strait of Hormuz. If that supply is cut off, global prices for nitrogen will skyrocket due to extreme scarcity.

The best way to think about nitrogen fertilizer is simply to imagine it as natural gas in a solid form. And CF Industries buys natural gas from some of the lowest-cost producers in the world at the U.S.’s major natural gas interchange, the Henry Hub in Louisiana. Meanwhile, with its infrastructure on the Mississippi River, CF Industries can service virtually every market for fertilizer in the world.

Much like Venture Global, CF Industries is a fantastic way to capture the spread between low-cost U.S. natural gas and soaring global natural gas prices.

As I explained on Friday, I think the Iran war makes my “1970s Stagflation Scenario” more likely. And the longer it goes on, the more certain I am of that terrible outcome.

The weak jobs report and soaring energy costs should mean a dramatic decline in economic growth – leading to a recession. You’d normally expect to see long-term interest rates (10-year Treasury yields) falling with that outlook. But instead, rates are rising. That’s because everyone knows if government spending grows (which it will) and tax receipts fall (no tariffs and rising unemployment), the Federal Reserve will have to increase its bond purchases to help the government fund its absurdly large debt. And that, of course, means higher inflation.

Weak corporate earnings because of a recession + rising interest rates + global war uncertainty + rising inflation = just about the worst possible outlook for the equity market.

That’s why, if you’re retired or if you simply don’t want to deal with a large drawdown in your portfolio, I suggest moving your portfolio to 50% cash. I hope you’ve followed our advice to invest in energy this year (see the “Chart Of The Day” below). And if you want further hedges against the risks of this war, please see Friday’s Journal in addition to today’s.

Now, let me explain why I think this war is going to be far worse than anyone expects. Caveat: I hope I’m wrong!

Our leaders seem to believe (despite repeated failed experiments) that other muslim nations want our help and are eager to adopt our culture and our values. That led to a 20-year disaster in Afghanistan. It led to a similar disaster in Iraq.

It’s as though they’re completely unfamiliar with the entire history of the West. Here’s a brief recap:

711: Battle of Guadalate – The Umayyad conquest of the Visigothic Kingdom, beginning nearly 800 years of Muslim presence in Europe

732: Battle of Tours (Poitiers) – Charles Martel’s Frankish forces defeated the Umayyad army, halting the northern expansion of Islam into Western Europe

1071: Battle of Manzikert – The Seljuk Turks defeated the Byzantine Empire, leading to the Turkification of Anatolia and serving as a primary catalyst for the First Crusade

1099: Siege of Jerusalem – Crusaders captured the city from the Fatimid Caliphate, establishing the Latin Kingdom of Jerusalem

1187: Battle of Hattin – Saladin decisively defeated the Crusader army, leading to the Muslim recapture of Jerusalem

1291: Siege of Acre – The Mamluks captured the last major Crusader stronghold, effectively ending the Crusades in the Levant.

1453: Fall of Constantinople – Sultan Mehmed II captured the city, ending the Byzantine Empire and establishing the Ottoman Empire as a world power

1492: Fall of Granada – The final defeat of the last Moorish kingdom in Spain by Ferdinand and Isabella, completing the Reconquista

1526: Battle of Mohács – The Ottomans defeated the Kingdom of Hungary, leading to the partition of Hungary for centuries

1529: Siege of Vienna – The first attempt by the Ottoman Empire to capture the Austrian capital; the siege failed

1683: Battle of Vienna – A combined force of the Holy Roman Empire and the Polish-Lithuanian Commonwealth defeated the Ottomans, marking the beginning of the end of Ottoman expansion in Europe

1801-1805: First Barbary War – Fought between the United States and the Barbary States (North African Muslim states) over piracy and the enslavement of American crews

1815: Second Barbary War – A brief conflict where the U.S. Navy ended the practice of paying tribute to the pirate states of Algiers, Tunis, and Tripoli.

The West has been at war with muslims for more than a thousand years.

I doubt that’s going to get resolved on our watch. I don’t believe that bombing Iran for weeks, months, or years will put a stop to this clash of culture and religions. I don’t think the Iranians are going to rebel against their religious leaders and “join our team.” I don’t think they want to be like us. Our core beliefs and our cultural traditions are completely incompatible with their religion.

Bombing Iran isn’t going to cause most Iranians to change their minds about these beliefs or make them unwilling to continue fighting back. In fact, the opposite will surely happen. It will only strengthen their resolve. And it will empower their rhetoric, that America is the “Great Satan.”

And do you know who wins the most from this conflict?

Russia.

Russia isn’t a country. It’s a gas station with a national flag. No other nation depends more on energy prices than Russia. This war is like our all-time best gift to Russian President Vladimir Putin – ever. It will cause further division among NATO members while sending Putin billions in extra profits each week.

In short, this is yet another American foreign war disaster in the making – despite its noble intentions.

Tell me what you think: [email protected]

Good investing,

Porter Stansberry
Stevenson, Maryland

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1. The Iran war has no off-ramp, and energy markets are pricing it in. The U.S.-Israeli war on Iran entered its second week with no ceasefire in sight. The price of crude oil surged to nearly $120 per barrel overnight before settling back around $95 this morning after the G7 nations floated a coordinated release of petroleum reserves. But the structural damage is done: the Strait of Hormuz is effectively closed, choking off 20% of global oil supply. Iraqi production has collapsed 70%. Qatar’s Ras Laffan – the world’s largest LNG export facility, responsible for 20% of global supply – is offline after an Iranian drone strike. And over the weekend, Iran named Mojtaba Khamenei – the hardliner son of the recently killed Ayatollah – as its new supreme leader, signalling the regime is digging in rather than capitulating. In short, energy prices are likely to remain higher for longer.

2. History says stocks have further to fall. The S&P 500 is down less than 3% since the U.S.-Israel strikes on Iran began on February 28. However, Bloomberg data show the S&P 500 has suffered an average maximum decline of over 8% following previous conflict-related oil spikes dating back to 1990. In addition, since 1950, the S&P 500 tends to suffer an average decrease of 16.2% between January and November in mid-term election years like this one.

3. The inflation fight just got harder. Crude-oil prices surging above $100 per barrel could easily push the consumer price index (“CPI”) back above the 3% threshold – it’s currently 2.4%. This resurgence in energy-driven inflation complicates the Fed’s path toward its 2% inflation target and essentially eliminates the possibility of a rate cut in the immediate term (next meeting March 17). This suggests a “higher-for-longer” interest rate environment – cornering the Fed between stagnating growth and rising commodity-driven price pressures that threaten to trigger a broader inflationary spiral.

At the start of 2026, we identified energy as our #1 investment theme – and it’s delivering, as shown in the year-to-date performance of Porter Stansberry’s Complete Investor list of recommended energy stocks. Just one is unchanged (a coal producer) while the others have trounced the S&P 500.

To see the names of these energy companies that are outperforming the market as well as the full list of recommended stocks, past and future recommendations, market analysis, editorial Roundtable, and all the offerings of Complete Investor, click here now.

Joe C. writes:

Porter Comment: Yes, I believe Bitcoin is extremely sensitive to changes in banking system liquidity. Over the past year or so, liquidity declined as the Federal Reserve shrank its balance sheet. By late 2025, bank reserves fell below the $3 trillion “psychological barrier,” hitting levels not seen since 2020. In December 2025, the Fed officially halted its balance sheet reduction program. By stopping the “runoff,” the Fed prevented reserves from dropping to levels that could cause a systemic banking crisis. It’s begun buying Treasury securities again, at $40 billion per month. This is helping to fuel an increase in banking-system liquidity, with reserves growing to over $3 trillion just last week. If there’s a substantial increase to the Fed’s purchases to help stabilize the markets against the oil shock, I have no doubt that Bitcoin will move much, much higher. I believe that Bitcoin will prove to be a better hedge in this crisis than gold. And, yes, obviously, an ETF that only owns Bitcoin will benefit.

Joe V. writes:

Porter Comment: I’m not sure what you mean by “the portfolio.” My newsletter The Complete Investor has a list of recommended securities, but not an allocated portfolio. I’ve also built several indexes, which are like portfolios, but aren’t actively managed. The only allocated “portfolio” is Porter’s Permanent Portfolio and it is a “set it and forget” approach to investing – so, there won’t be any changes to its positions. The Permanent Portfolio doesn’t do any trading – at all. We will re-evaluate the 20 individual equity components and the P&C insurance companies as we always do, in September. But, honestly, I don’t expect any changes, at all, this year.

Why not? Most of the time, such trading only adds to costs (taxes). So we try to do as little trading as possible, outside of what’s required to rebalance each year. If you’re not going to need these assets for five years or more, then I believe you’ll be fine simply following the strategy. Drawdowns are a part of life.

However, if you’re very near retirement or if you simply don’t want to have to deal with what might be severe volatility so you have decided to raise cash, then I recommend selling the fixed-income portion of the portfolio, which as you know, is made up of P&C insurance stocks.

Let me be crystal clear: I can’t tell you what you should do. I don’t know you, your financial situation, or your ability to withstand a drawdown. If you’re following the strategy and you’re willing to handle a drawdown, then follow the strategy. If you’re not going to stick with the strategy and you want to raise cash, then I recommend selling the P&C stocks. In any outcome, I would not expect to see the Permanent Portfolio decline more than 20%. If you can manage that kind of volatility, then my advice is to stay the course… but again… that advice is only given in the abstract. You’ll have to decide which course is right for you.

Dave H. writes:

Porter Comment: I hope my comments above will help clarify. Overall, it’s not a good idea to trade in and out of stocks unless absolutely necessary, which is why the strategy does not endorse such trading. The Permanent Portfolio is designed to be internally hedged and to mitigate risk through non-correlated assets (stocks, bonds, gold, and cash). I have faith that the strategy will work just fine. The only question is: can you handle a drawdown, financially and emotionally? If you’re retired, a 20% drawdown can be very difficult, especially if you’re relying on high stock prices to fund your retirement through equity sales. Additionally, war with Iran is a risk that I can’t handicap – no one can. Today equity prices are very high and, relative to real-world inflation, interest rates are extremely low. It’s hard for me to imagine that these circumstances will last over the next year, especially if the war continues. So if you’re not prepared to deal with a lot more volatility and the potential for a large (~20%) drawdown, then raising cash might be the best idea for you. But you have to remember that doing so has risks too. You might miss the next big rally. And you will generate taxes.

Alas, there’s no certain right answer, so what you decide to do depends more on your circumstances and emotions than on the markets themselves.

As for me personally, I remain fully invested, although I have reduced the leverage in our Meadowdale Capital fund from 2.5x to zero. In doing so, I have exited all of my P&C insurance stocks. And I have added, significantly, to my energy and other war hedges. So far, it’s been a losing battle. My fund has gone from being up 30% for the year (!) to being up just over 10% – so I’ve seen a multi-million dollar drawdown so far. As I’ve written before, if the 10-year Treasury goes over 5%, I’ll liquidate most of my equity holdings. Until then, I’m trying to battle the drawdown with hedges.

Please note: The investments in our “Porter & Co. Top Positions” should not be considered current recommendations. These positions are the best performers across our publications – and the securities listed may (or may not) be above the current buy-up-to price. To learn more, visit the current portfolio page of the relevant service, here. To gain access or to learn more about our current recommendations, call our Customer Care team at 888-610-8895 or internationally at +1 443-815-4447.