Hello reader, welcome to the latest issue of HX Weekly!

Each week we bring you a new edition of HX Weekly that includes three distinct sections.

In the first section, Thoughts on the Market, we'll offer insights into current economic and market news.

In the second section, HX Daily Redux, we'll revisit investing concepts, tactics, and more from past issues of HX Daily.

And in the third section, Market Wizard’s Wisdom, we’ll share thoughts, quotes, and theories from the greatest investing minds of all time.

Now, let's dive in!

For the majority of the time over our thirty-year career, major geo-political events have NOT been a material driver of stock price moments. Either in the short-term or long-term.

Right now, is NOT one of these moments.

For one of the very few times in my three decade career, we are looking at a stock market outlook that is dependent on what happens in the Iran conflict.

In our free publication with Paradigm Press, Truth & Trends, we have shared insights based on our extensive research and analysis of the situation.

In this week's HX Weekly, we share our two most recent notes - [48 Hours] One Step Closer to the Iran Endgame and Iran: Fast Checkmate, But Maybe No Winner.

The conclusion?

Buckle up and be prepared. What happens as soon as this weekend, could define the direction of the stock market for the next year or longer.

Have a good weekend!

Thoughts on the Market

[48 Hours] One Step Closer to the Iran Endgame

If you’ve been watching Trump’s press conferences on the war with Iran, you’ve probably noticed something peculiar.

The delivery can feel scattered, almost like a stream of consciousness.

But if you slow it down, listen carefully, and (most importantly) watch more than one appearance, a pattern starts to emerge.

Beneath the "word salad" lies structure. And beneath the structure lies strategy.

That strategy is far more focused and achievable than many commentators would have you believe.

Because, despite all the noise, the U.S. has been remarkably consistent about its actual objectives.

When you step back and focus on those goals, it becomes clear what the next phase — and ultimately the endgame — will look like.

Today, I want to talk to you about this next phase and why I believe it could all kick off as soon as this weekend.

Three Goals That Keep Showing Up

From the very beginning, Trump has repeatedly referenced the same core goals:

1. Degrading Iran’s drone capabilities

2. Neutralizing its missile infrastructure

3. Eliminating any viable nuclear threat

Those three pillars have come up repeatedly, often wrapped in off-the-cuff remarks, but clearly rooted in military briefings.

If you’ve spent enough time around markets — or frankly, around decision-makers — you learn to recognize when someone is speaking from instinct rather than channeling information from experts.

In this case, it’s obvious that Trump is in constant dialogue with top military leadership.

What’s equally important is what hasn’t been emphasized.

Regime change, while occasionally mentioned, has never felt like the primary objective. It’s been framed more as a potential outcome than a requirement.

That distinction matters.

Because wars aimed at regime change tend to drag on for years. Wars aimed at degrading capabilities and reshaping incentives can end much faster.

And now, this week, we’ve seen something new.

For the first time, credible reports indicate that communication channels have opened between the U.S. and Iran, with Pakistan acting as a mediator.

Both sides have floated initial demands.

The U.S. proposal reportedly includes a detailed, multi-point framework.

Iran’s counter includes familiar themes: the removal of the U.S. military presence in the region, control over the Strait of Hormuz, and broader sovereignty concerns.

On the surface, it all looks complicated. But in reality, it’s probably much simpler than that.

What Iran and the U.S. Actually Want

Strip away the rhetoric, and each side’s core motivation becomes clear.

For Iran, despite how it is often portrayed, the behavior over the past several weeks suggests something very different from chaos or irrational escalation.

In fact, what we’ve seen looks more like controlled signaling.

There have been attacks, yes, but often targeted in ways that send a message without triggering maximum retaliation.

One example that stood out was the strike on Qatar’s LNG infrastructure. Reports indicate that only specific processing units (linked in part to Western energy interests) were affected, while the broader facility remained intact.

If the goal had been total disruption, the outcome would have looked very different.

That tells you something important.

This is not a regime acting without calculation. It’s a regime acting to survive. And that, more than anything, is the key to understanding what Iran actually wants.

They want to remain in power. They want relief from economic pressure. And ultimately, they want to be left alone.

If their objective were outright regional destruction, they’ve had ample opportunity to pursue it more aggressively.

They haven’t.

Instead, they’ve walked a line, aggressive enough to maintain leverage, but measured enough to avoid existential retaliation.

Now look at the U.S. side. Again, if you read between the lines of recent statements, a plan is starting to take shape.

Even as calls for a ceasefire have been floated publicly, military positioning tells a different story.

U.S. forces are moving rapidly into the region. Reports suggest that an expeditionary force could soon be in position to control the Strait of Hormuz effectively.

Meanwhile, an international coalition is forming, with naval and military assets from dozens of allied nations preparing to secure key shipping lanes.

It’s important to understand why those allies are participating.

This is not about loyalty to the United States. It’s about self-preservation.

A Fight for the Strait That Runs the World

The Strait of Hormuz is the world's single most important energy chokepoint.

Roughly 20% of global oil supply flows through that narrow passage, along with massive volumes of liquefied natural gas, fertilizers, and other critical commodities.

The recent disruptions have already sent shockwaves through global markets.

Europe is staring down potential fuel shortages within weeks. Asian economies are feeling the strain. Insurance costs for shipping have surged.

Even partial disruptions, tankers hesitating, routes slowing, and cargo being selectively allowed through have been enough to drive significant price volatility.

And here’s the part many people miss: there is no real workaround.

Despite what some headlines suggest, alternative pipelines and routes simply do not have the capacity to replace Hormuz.

The global energy system is not a flexible network; it’s a funnel. And that funnel runs through one narrow stretch of water.

Which brings me back to the strategy.

If you step back and connect the dots, two likely moves emerge.

First, the U.S. and its allies will move to secure the Strait of Hormuz through an overwhelming projection of military power. This is not without precedent.

In the late 1980s, during the Iran-Iraq War, the U.S. successfully escorted and protected commercial shipping through the same region. The playbook exists.

Second, there is a strong case to be made that the U.S. will move to neutralize Iran’s ability to leverage its own energy exports.

Specifically, this will most likely include some takeover or blockade of Kharg Island, which handles the vast majority of Iran’s oil shipments.

Cutting off that outlet would dramatically reduce Iran’s economic leverage while increasing pressure to negotiate.

According to multiple senior U.S. officials, the Pentagon and U.S. Central Command are actively developing plans for a “finishing blow” against Iran.

The options under consideration align closely with the strategic framework I’ve outlined above.

I believe these moves could happen as soon as THIS WEEKEND — or possibly the following one, which marks five weeks of the conflict.

The execution is likely to follow a very specific order.

First, Iran’s export capacity would be constrained at the source, most likely through a blockade of Kharg Island.

This could be done in a way that avoids direct damage to infrastructure, preserving optionality while immediately reducing Iran’s leverage.

At the same time, U.S. and allied forces would likely move to neutralize Iran’s operational foothold inside the Strait itself — particularly around key positions like Larak Island and Abu Musa, which anchor its ability to disrupt shipping.

Finally, control of the Strait would be enforced directly, restricting Iranian traffic while ensuring the continued flow of global energy supply.

Once these objectives are achieved — control of the Strait and constraint of Iran’s export capacity — the negotiating dynamic changes entirely.

At that point, the U.S. isn’t negotiating from a position of urgency. It’s negotiating from a position of strength.

And that’s when things tend to move quickly.

What Happens After This Next Phase

If this framework plays out as I predict, Iran's endgame is likely to include some combination of sanctions relief, access to frozen assets, and, most importantly, regime survival.

For the U.S. and its allies, the primary objective will be to restore the free flow of global energy and avoid the cascading economic consequences of a prolonged disruption.

For investors, this is where it gets interesting.

Markets are currently pricing in uncertainty.

They are reacting to headlines, volatility, and the very real risk of escalation. But markets also have a history of snapping back quickly once clarity emerges.

If the Strait is secured and negotiations progress, the setup for a sharp, V-shaped recovery is very real.

We’ve seen similar dynamics before, most recently in the rapid rebound following the tariff-driven selloff in April of last year.

That doesn’t mean the path will be smooth. Far from it.

Securing one of the world's most strategically contested waterways is not a trivial task. 

There will be risks. There may be further escalation. And unfortunately, there will almost certainly be more bloodshed before this is resolved.

But when you step back and look at the incentives on both sides, the direction becomes clearer.

The U.S. wants stability in global energy markets and the neutralization of key military threats.

Iran wants survival.

Those objectives, while seemingly opposed, are not mutually exclusive.

Which is why, despite how chaotic things may feel in the moment, there is a growing case to be made that we are closer to the end of this conflict than the beginning.

Not months from now. Weeks.

And if that’s true, the market implications could be just as significant as the geopolitical ones.

HX Daily Redux

Iran: Fast Checkmate, But Maybe No Winner

In chess, there are points when the game isn’t over, but the outcome is already decided.

Checkmate — from the Persian shāh māt, meaning “the king is helpless” — is now inevitable.

That’s the point we’re at now in the Iran conflict.

As I said last week, I believe we are entering the final stages of the conflict.

I wrote to you describing how the U.S. could take a series of military actions to secure the Strait of Hormuz — possibly over the weekend.

While it didn’t happen as soon as I predicted, I’m even more confident now that they are about to happen. 

The “Center of Gravity” Concept

Over the years, I have had a great interest in military history and tactics. But I haven’t spent nearly as much time as I would like studying them.

That’s mostly because they have not been particularly relevant to making money in the markets. Well, they are now.

So over the last few weeks, I’ve been devouring articles, blogs, and podcasts with experts.

Over the weekend, I listened to a former U.S. military officer talk about the writings of Prussian military theorist Carl von Clausewitz.

Clausewitz served in the Prussian army and fought in the Napoleonic Wars. His most famous work “Vom Kriege” (On War) is considered a must-read for military strategists.

One of his most important concepts is the idea of a “center of gravity.”

This is the idea that there are particular sources of the power of an enemy. It’s what drives and enables them to fight.

Remove that center of gravity, and you eliminate the will of the enemy and win.

In a revolution or uprising, it could be a leader or public opinion. In a war of regime change, it’s over the capital city and the major leadership.

Or in a war like this one, where you’re looking to degrade the enemy's ability to project power, it’s their capabilities.

Thinking of it from the point of view of Clausewitz’s “center of gravity,” I see three of them for Iran. They are:

1. The ability to continue to fund their regime and military with oil exports.

2. The ability to restrict/stop traffic in the Strait of Hormuz.

3. The ability to destroy the oil production assets of the other Gulf states.

These are their major capabilities.

Removing Iran’s First Two Centers of Gravity

In my Thursday article, I outlined that the next move by the Trump administration is to go after the first two.

First, we mine the area around Kharg Island, which can be done by air or submarine. We can use smart and traditional mines, so we know where they are and can turn them on and off. 

This means we can quickly allow the Iranians through if there is a deal.

They have no air force or navy to stop us from making this move.

With one move, we prevent any ships from leaving Kharg with oil and not a single soldier in the group.

We don’t damage any production equipment or kill a single Iranian. Given the destruction of their anti-aircraft defenses as well, there might not even be a shot fired.

Obviously, I don’t think that will actually happen. But the point is that there is NOTHING they can do to stop this move.

Then, the U.S. and allies (European, Asian, and Gulf) blockade the area outside the Strait of Hormuz in the Gulf of Oman. We stop any Iranian oil that is already on the water.

If they can block everyone else’s oil, why can’t we block theirs?

Again, there is nothing Iran can do about this move. They have no navy.

Without a single soldier on the ground anywhere, we completely shut off their oil.

The first “center of gravity” is removed.

Next, we take those islands we discussed last week, Larak and the Abu Musa islands, and bomb them into absolute dust.

In this case, we might have some marines go in, but the boots will be hitting ground of dust by the time we are done bombing them.

These islands WILL be destroyed and secured. There is no way at all for Iran to stop it.

Once this is done, the allies (mostly the U.S.) move in with significant naval and air assets.

A-10 Warthogs and attack helicopters are great for knocking out drones and fast boats. 30mm autocannon rounds from an A-10s Gatling guns are a lot cheaper than Patriot missiles.

The naval ships also have significant capabilities and have not yet been utilized.

Will we be able to secure 100% of the traffic through the Strait of Hormuz after these moves?

No. During the 1984–1988 “Tanker War” period of the Iran-Iraq war, 55 oil tankers were either completely sunk or declared a total loss.

The USS Stark was hit by two Iraqi Exocet missiles, killing 37 sailors in May 1987.

Despite these attacks, estimates are that only 2% of the total traffic going through the Strait was disrupted.

We have not started ANY of these moves yet.

Why? Perhaps it was a miscalculation by the U.S. military.

More likely, the idea was to start the air campaign and see if we got “lucky” with regime change quickly. If we didn’t, we would move to the next steps, which are happening now.

Sorry, there is NO scenario where U.S. military strategists did not see this happening in the Strait of Hormuz.

Now that they have moved the assets in place, we remove the second “center of gravity.”

This is the point at which I think we will be as soon as next week.

That Just Leaves the Final Center of Gravity

Now, I am going to tell you something obvious that may sound surprising.

The Iranians already know everything that I wrote above — 100% of it.

Not because they have master spies, but because they also are smart military strategists.

So, what are they going to do about it?

The reality is that there is nothing they can do to stop the moves above.

Yes, there is no guarantee that the U.S. can get the Strait operational again, but the other moves can’t be prevented. Even the freedom of the Straits is highly probable.

As a result, it is my view that there’s a significant chance (40% probability) that we see a deal before the U.S. makes these moves.

The Iranians are at that point where they see the checkmate. They have to decide if they want to keep more of their pieces.

If there is no deal, these moves will happen within a week or two.

Then my view is that it is still a high probability (50%) that we see a deal.

What does a deal look like?

Impossible to say, but it will look a lot more like the U.S. 15-point deal versus the Ayatollah’s Santa wish list.

There will, however, be enough in there for the Iranians to save face. Trump is good at doing that for the folks on the other side of the table.

Expect a press conference that goes from calling the new religious leader “mini-me” to praising his negotiation skills.

In the scenarios I outlined above, I have put a 90% likelihood of a positive resolution in the next few weeks.

Importantly, the Iranian regime survives. An extremely weakened version, but they live.

Note, that leaves 10% of a negative solution. What does that look like?

Deprived of access to its oil and having lost its ability to restrict the Strait of Hormuz, Iran exercises its third “center of gravity.”

They destroy everyone’s oil production assets.

Can they do it? Absolutely.

I think it could happen in just a few weeks, but they could do this at any point.

What happens if they do this? Global oil prices will soar. Think $200, maybe even $300.

This would absolutely result in a global recession.

It will also result in a guarantee that the Iranian regime does NOT survive.

There is no scenario where the world backs down after such an event.

Cut off from oil, the regime falls into chaos.

Is this a terrible result for Iran? The Gulf? America? The world? Yes, it is.

That doesn’t matter, though; it’s where we are at this point.

Now, I am not trying to defend any of the moves above nor agree (or disagree) with what has happened or what we think will happen.

I am simply trying to figure out what WILL happen.

Bringing It All Back to the Stock Market

The whole reason for this exercise is not to engage in intellectual curiosity, but because it has a direct impact on the U.S. stock market.

If we see what I think is the most probable outcome, a peace agreement with a weakened Iran, I think markets will soar initially.

They may be volatile after that, but I wouldn’t be surprised to see new highs again by year-end. I can even see a “melt-up” in shares.

If we see the improbable outcome, it is the opposite. I think stocks could fall 20% or more from current levels.

What does that mean for stock investors?

For the long term, it doesn’t mean a whole lot. Stick with your investments and ride them out.

Remember that even in our worst-case scenario, we see an eventual cessation of violence and a return of that oil. Potentially with a much less aggressive Iran going forward.

For the short term, it presents opportunities and risks.

Fortunes can be made and lost in these types of markets. The key is to move quickly.

For all of us, buckle up and get ready for some volatility. Remember to keep cool and have a plan.

Market Wizard’s Wisdom

The Art of War…and Investing

With the conflict in the Middle East dominating headlines – and the course of the stock market currently – we thought we would profile one of the greatest military strategists of all-time.

The Chinese military general, philosopher and writer – Sun Tzu.

While his historical existence is not completely confirmed, he was thought to live during the Eastern Zhou period from 771 to 226 BCE. The name “Sun Tzu” means “Master Sun” and his birth was name was said to be Sun Wu.

There were many stories written about him after his death and it is from those accounts that his legend was created.

He is revered in Chinese and East Asian culture and considered one of the most influential writers of the last three thousand years. His writings and philosophy have influenced not only military strategists but also the fields of philosophy and negotiation in all its forms.

Today, we are going to share several of his ideas along with our quick take on how they apply to both trading and investing.

Enjoy!

This is a point we make often – it is important to understand what kind of trader investor you are and also the kind you want to be.

Understanding what mistakes you make consistently allows you to identify and eliminate them. This will help eliminate losses.

Understanding what you do best consistently will help you maximize your gain.

This one feels particularly appropriate this last month, yes?

The reality is that the biggest short-term rallies in the stock market have occurred during the most volatile periods.

Trading these markets is not for everyone, but for those that can establish a plan, there are the biggest returns.

Going back to our first point, know which type of investor you are…. trade a lot or don’t trade at all.

The single biggest mistake investors make is NOT being selective enough.

Your most powerful move is NOT doing anything.

The vast majority (99%+) of moves you look at should be avoided.

Be hyper selective about your battles and you will see your chance of victory skyrocket.

Preparation is the key.

When the market is moving fast, it is hard to make the right decision.

Often, the market will also move before you even have a chance to react.

Create a great plan to deal with volatility (and opportunity) and stick to it.

Plan the Trade, Trade the Plan.

Another one of the most common mistakes is overactivity.

Action does not mean progress.

Be ruthless about ONLY making a move when you are sure the odds are high in your favor.

You hear it often, but don’t risk more than you can afford to lose.

If your losses overwhelm you emotionally, then you won’t be in a position to make the right decisions.

Size your positions – and your overall risk portfolio – so that your psychology is your friend and not your foe.

We hope that you’ve enjoyed this week’s issue of HX Weekly…

Do you have any thoughts, questions, or feedback? Tell us more in the comment section or at [email protected].