The Guns Of October

The Guns Of October 

Our title is of course an allusion to Barbara Tuchman's Pulitzer-winning history of the missteps that led to outbreak of World War I, The Guns Of August. World War I was preceded by the July Crisis, which our friend Sergei Witte referenced in the post below, about the current Israel-Hamas conflict. 

In addition to getting a green light from the U.S. for the invasion, Israel has now been given a freer had by the press. As our Russian correspondent Anatoly Karlin points out, after their fiasco reporting on who bombed the Al-Ahli Baptist Hospital in Gaza, people will be more skeptical about war crimes claims coming out of Gaza.  

All of that increases the chances that this war will spread into something global; preventing it was the subject of Tucker Carlson's latest episode on X. In it, he talked to Presidential candidate (and former Jim Cramer guest promoting a stock that dropped ~99%) Vivek Ramaswamy about Ramaswamy's plan to keep the Israel-Hamas war from spiraling out of control. 

Vivek's Plan To Prevent World War III

We're going to continue our practice of referring to Vivek Ramaswamy as "Vivek", as it's easier to type. In his conversation with Tucker, Vivek made some good general points, such as that an American President should do what's in the best interest of America, and neocon hawks such as Nikki Haley and Lindsey Graham don't seem to have that top-of-mind judging from their recent comments about the Israel-Hamas conflict. Vivek had made this point previously in a post on X: 

All well and good, as was Vivek's suggestion that Israel learn from the unintended consequences of America's reaction to 9/11. But when it comes to his actual plan to prevent this conflict from spreading, there's not much there. Vivek says before Israel invades Gaza, it should have a clear goal, in his words, to get the top 100 leaders of Hamas, and (metaphorically, presumably) "put their heads on pikes". 

The Problems With Vivek's Plan

One problem is that it's not clear what, in practice, this would do to shorten Israel's invasion, or lessen the damage to Gaza. Presumably, Gaza's top men are going to be the best protected people in the territory, and the IDF would have to go through much of the rest of Gaza to get to them. 

It's also not even clear that, in a clan-based society, "decapitation strikes" of this sort work. Author Mark Bowden made this point in his landmark book about America's misadventure in Somalia in the early 1990s, Black Hawk Down. At one point, the U.S. Army hit a meeting of Somali clan leaders with a TOW missile, thinking that would effectively end the clan as a military force. Of course it didn't work: clans are hierarchies, and there's always a younger brother, or nephew or someone else one rank down ready to take over. 

A Better Solution 

A better solution might be to use the stick of an Israeli invasion, and the carrot of safe passage, to encourage Hamas to leave peaceably, perhaps to Iran. There is a historical precedent for this.

Forty one years ago, the IDF had cornered the PLO in Beirut. To spare the city of Beirut from invasion, after reaching an agreement with Israel, UN-flagged ships under French naval escort evacuated 8,500 PLO members from Beirut. Most ended up going to the PLO's new headquarters in Tunisia. 

The next step would be to replace Hamas with a Palestinian government in Gaza that doesn't fire rockets or launch cross-border raids into Israel. In a more perfect world, that new government would be led by El Salvador President Nayib Bukele. 

But even the current Palestine Authority governing parts of the West Bank now would be a big improvement over Hamas (they were running it before Hamas defeated them militarily in 2007). 

Protecting Your Investments From A Widening War

If you're worried that a widening war could crash the markets, a reminder that you can use the Portfolio Armor web app to find the optimal hedges for any stock or ETF with options traded on it in the U.S. 

You can enter odd numbers of shares if you want, and the algorithm will slightly over-hedge the round lots to account for them. Say you want to hedge 1,037 shares of SPY against a greater-than-17% decline over the next month. No problem:

That screen capture comes from our iPhone app, which is currently closed to new investors, but the same functionality (and more) is available on our web app. 

If you'd like a heads up when we reopen our iPhone app to new investors, feel free to subscribe to our trading Substack/occasional email list below. We'll also be sending out a couple of trade ideas via that later today. 

If You Want To Stay In Touch

You can follow Portfolio Armor on Twitter here, or become a free subscriber to our Substack using the link below (we're using that for our occasional emails now). You can also contact us via our website. If you want to hedge or see our current top ten names, consider using our website (our iPhone app is currently closed to new users).