Historical precedents show markets recover within 3-6 months after Middle East military events (median 1Y return: +10.2%). The portfolio is 76%+ in positions that are neutral-to-positive in this scenario. The main risks are concentrated in Alibaba (6.9%), Tencent (3.8%), Taiwan Semiconductor (2.3%).
| Trigger | Action | Urgency |
|---|---|---|
| Strike announced (Day 0) | Trim BABA by 40% (from 6.9% to 4.1%), trim Tencent by 40% (from 3.8% to 2.3%) | Immediate |
| Oil spikes above $100/bbl | Deploy $1,000,000 from bonds into energy (XLE or top DB picks) | Within 1 week |
| VIX spikes above 25 | Deploy $500,000 into VIX puts (hedging position) | Within 1 week |
| Strait of Hormuz threatened | Trim TSM by 50% (from 2.3% to 1.1%), move proceeds to cash | Immediate |
| Markets drop 10%+ from peak | Deploy remaining $2,000,000 bond capital into index ETFs (QQQ, IVV) | Within 1 month |
| Diplomatic resolution | Unwind hedges, restore trimmed positions to original weights | Within 1 week |
| Scenario | Probability | SPY Median 1Y | Oil Shock | Recovery |
|---|---|---|---|---|
| Limited Strike | 25% | +8.3% | +15% | 21d |
| Escalation | 20% | +5.3% | +30% | 63d |
| Full Escalation | 10% | -0.6% | +60% | 126d |
| Diplomatic Resolution | 35% | +13.2% | -8% | 5d |
| Prolonged Conflict | 10% | -6.6% | +80% | 252d |