The Aftermath of the Israel-Iran Conflict is Hard to Shake the Market's Foundation: The Rational Return Behind the Long Position Washout
Israel and Iran, two small countries in the Middle East, despite multiple conflicts, have never been able to shake the fundamental global market. After a brief fluctuation, the market once again confirms this rule - what seemed like a dramatic long position washout yesterday was merely a brief ripple in the tide of capital.
Historical experience repeatedly proves that localized geopolitical conflicts often exhibit diminishing marginal effects on the global economy. Although Israel and Iran are at odds militarily, their economic scale, resource reserves, and market influence are insufficient to constitute systemic risk. The gold safe-haven premium was short-lived, and the stock market and cryptocurrency indices quickly regained lost ground after a brief dip.
Yesterday's concentrated closing of long positions was more of a capital response to short-term emotional risk aversion, and many highly leveraged traders faced liquidation. I still believe that their conflict is not enough to affect the entire market; this is just a normal cleaning of long positions.