Oil, Conflict, and the Case for Boring

Every time tensions flare in the Middle East, the same conversation starts up again. Oil prices spike. Energy stocks jump. Investors scramble to figure out whether they are positioned correctly. And then, some time later, the noise fades and markets move on to the next thing.

We have seen this cycle repeat enough times to have a clear view on it: trying to trade around geopolitical events is largely a losing game. The timing is nearly impossible, the outcomes are unpredictable, and the transaction costs — both financial and psychological — add up quickly. What matters more is whether the businesses you own are built to hold up when the world gets complicated.

Right now, the world is complicated. Conflict in the Middle East continues to create uncertainty around oil supply and regional stability. U.S.-China tensions, spanning trade, technology, and Taiwan, represent what we believe is the defining geopolitical fault line of the next decade, with implications that stretch across supply chains, semiconductor markets, and global capital flows. Tariffs are reshaping trade relationships in ways that are difficult to fully anticipate, and the broader geopolitical order feels less stable than even a few years ago, let alone a decade ago. These are real forces with real economic consequences, and we take them seriously.

But here is how we actually respond to that environment: we focus on owning businesses that don't need a calm world to keep performing.

Some of those are energy producers. Companies with low-cost, long-life assets that generate strong cash flow across a wide range of commodity price environments. When geopolitical risk pushes energy prices higher, these businesses tend to benefit. When prices pull back, their cost structures keep them well-positioned. They are not a bet on any specific outcome in the Middle East. They are, in our view, a sensible exposure to a commodity the world continues to need.

But the more important point is broader than energy. The businesses we find most compelling tend to share a common set of traits regardless of what sector they operate in — strong competitive positions that are difficult to replicate, pricing power that allows them to pass costs through to customers, robust free cash flow generation, and balance sheets that give management the flexibility to act when opportunities arise. These are businesses that can absorb a difficult quarter, navigate a supply chain disruption, or weather a period of slower growth without permanently impairing their long-term trajectory.

Some of these businesses are well-known. Others are quieter; companies that rarely make headlines but have been compounding value steadily for years. In our experience, the latter category is often where the most interesting opportunities live. They are boring by design, and that is exactly the point. When markets get volatile and speculative positions unwind, boring tends to hold up well.

We are not defensive investors. We own dynamic, high-growth businesses alongside steadier ones. But the mix is intentional. The steadier businesses provide ballast, and they can keep compounding quietly while the rest of the portfolio does its thing. Together, they form portfolios that we believe are built to perform across a wide range of environments, not just the comfortable ones.

Geopolitical risk is not going away. The world will keep generating uncertainty. In our view, the right response is not to predict how it all resolves. It is to own businesses that don't require a clear resolution to keep moving forward.

Sometimes boring is exactly what you want.