With oil crossing over $100 a barrel and the Strait of Hormuz still closed, the severity of the situation is becoming clearer by the day. As I keep saying in these newsletters, nobody knows what happens next. I am certainly not going to pretend that I do.
We will start to learn what economic damage has already been caused in the coming weeks, as detailed data for March starts to roll in. And the longer the Strait remains closed, the worse things will get. That is almost inevitable.
There are big incentives on both sides of the conflict to bring about a swift end to this mess. But the road to get there looks about as clear as mud right now. Unfortunately, an end does not appear to be imminent.
The Strait of Hormuz carries roughly 20% of global oil supply. Its closure sent prices surging past $100.
What Does $100 Oil Actually Affect?
More than you would think.
When oil spikes, companies pay more to ship goods, run factories, and keep the lights on. Those costs get passed on to consumers. Prices rise. Inflation creeps back. And when inflation rises, central banks react.
The ECB, for example, spent all of 2025 cutting rates from 2.75% down to 2.00%. That was great for borrowers, for markets, for anyone with a mortgage. But now, with oil above $100 and energy costs climbing, officials are already talking about potential rate hikes as early as April.
A full U-turn in the space of a few months. And you can bet other central banks around the world are having similar conversations.
Four cuts in 2025, then a hold. Now rate hikes are back on the table for April 2026.
European markets have taken a bigger hit than the US this week, largely because Europe imports most of its energy. But nobody is immune. Higher oil prices ripple through every economy, every supply chain, every consumer's wallet.
What I Am Doing
Honestly, the same thing I always do. Dollar cost averaging, every month, regardless of what the headlines say.
Sometimes times are better, sometimes they are worse. I cannot predict the future, and I am not going to wait for the perfect moment that may never come. So I just keep going. A bit into stocks, a bit into ETFs, a bit into P2P lending, and more into cash than usual.
That last part is important. I learned this the hard way in past downturns. I thought the bottom was in, deployed a big chunk of cash, and then the bottom kept going lower. Suddenly I wished I had more dry powder. If you want to understand how I think about diversification across asset classes, I wrote about that in detail recently.
Cash gives me optionality. If markets drop further, I can buy more at lower prices. And if things get really bad, bad enough to impact businesses and income around the world, I am not forced to sell stocks at a loss just to cover expenses. That peace of mind is worth a lot.
On Picking Stocks Right Now
If you are not comfortable picking individual stocks in this kind of environment, I get it. I hold individual positions, but not everyone wants to do the research or take that kind of concentrated risk. If you prefer a more hands-off approach, there are plenty of ways to invest without picking stocks.
One tool I have been using for a while is Seeking Alpha's Alpha Picks. It is a quant-driven service that gives you 2 stock picks per month, based on factors like value, growth, and profitability. Since launching in mid-2022, their picks have returned roughly 3x what the S&P 500 has done over the same period. Not every pick wins, about 72% have been profitable, but historically the winners have more than made up for the losers.
It is not a magic formula, and past performance does not guarantee anything. But if you want a data-driven starting point for stock ideas without spending hours on research, it is worth a look. You can check out Alpha Picks here.
Why I Stopped Checking My Portfolio
I have actually been checking my portfolio less.
I used to look at it pretty much every day. Right now, it is just depressing, and I do not want to be depressed. I am a long-term investor. I know this period is just a blip when I look back on it in 10 years. But I cannot speed things up.
So I do myself a favour and check less. I focus on things I can actually control. Building my business, spending time with my family, exercising, taking care of my health.
Like anyone else, I do not feel great when I see red numbers. That is totally normal. But staring at your portfolio every day during a downturn does not change the outcome. It just changes your mood.
The Bigger Picture
Oil has been above $100 before. Each time it felt like the new normal. Each time, it was not. Energy prices, like most things in markets, tend to revert to the mean.
Peak price vs. subsequent trough. Energy prices tend to revert to the mean.
The same goes for the broader effects. Inflation spikes driven by energy tend to be temporary. Central banks adjust. Companies adapt. The economy finds its balance again.
None of this changes the fundamentals of long-term investing. Companies will keep growing, innovating, and generating profits. Markets will keep climbing over time, with plenty of bumps along the way.
The investors who do well are not the ones who predicted the oil price correctly. They are the ones who stayed invested through the noise. If you are just getting started and want a framework for how to think about your portfolio setup, that is a good place to begin.
Disclaimer: This article is for educational purposes only and does not constitute financial advice. When investing, your capital is at risk. You may get back less than you invested. Past performance is not a guarantee of future results. This article contains affiliate links, meaning I may earn a small commission if you sign up through them, at no additional cost to you.
