Our World Is in Turmoil, So De-Risk!

When Bad Guys Sneak Up on You, It’s Time to Get Back to Basics

As you likely know, on Oct. 7, Hamas staged a massive assault on Israel that killed a large number of civilians. Israel is retaliating, while Iran is rattling its saber, and the so-called “Arab street” is erupting everywhere.

In short, the world is in turmoil. The situation is like a room filled with kegs of gunpowder, and too many crazy people are smoking cigarettes, if you get my drift.

So right now — and I mean NOW! — it’s time to de-risk.

Whatever you thought was going on just a few weeks ago, it’s all changed. Get back to basics and prepare for the world that will evolve out of this global-scale, geopolitical mess.

But first, let’s talk about the weather and air-to-air combat.

Have You Ever Been Jumped by an F-4 Phantom?

I’ve seen much of the Middle East: in recent years as a civilian geologist and newsletter writer; but also, over many years past, while wearing the cloth of the U.S. Navy.

And my takeaway point is this: NEVER underestimate the capabilities of your opponent!

That particular lesson was burned into my brain back in May 1985, high above the Persian Gulf, when the Navy airplane I was in got “jumped” by an Iranian F-4 Phantom jet. I’m still here, of course; but the fact is that we never saw him coming because he knew how not to be seen… and that’s the key to this story.

Quick summary: I was copilot in a Navy S-3A Viking, an antisubmarine warfare aircraft, but also full of radios and other electronics, including an outstanding surface search radar.

Navy/Lockheed S-3A Viking in VS-37 squadron colors, circa 1985. Navy photo. 

You’ll find this photo in Wikipedia, and I think I actually took it back when I was assigned to a Navy squadron designated VS-37. We were based at North Island, San Diego, and attached to the aircraft carrier USS Constellation (CV-64), a vessel now long-gone to the breakers down in Brownsville, Texas.

In 1985, the good ship “Connie” sailed across the Pacific and Indian Oceans to take up station in the North Arabian Sea, south of Iran. Routinely, my squadron flew surveillance missions north, into the Persian Gulf, to track ships and do electronic things.

One interesting — and vexing — meteorological feature of the region is the dust layers in the atmosphere. That is, prevailing winds blow west-to-east across Saudi Arabia and pick up very fine particles of dust.

Then those dry, dusty winds hit the Persian Gulf and encounter an air mass filled with moisture from evaporation. The short version is that the dust forms into haze layers at certain altitudes; like blankets of slightly damp dust that sit atop the heavier moisture layers in the air below.

These haze layers are a literal and electronic mess. When you fly through them, they deposit brown crud on the skin of the airplane. They clog up air filtration systems, and they’re not at all good for the engines. It’s a maintenance headache for sure.

And there’s something else about those haze layers; they distort radar signals. Depending on the angle of incidence of a radar wave, the dust layers reflect, refract, and otherwise deform the return.

Okay, “so there I was,” as many a good sea-story begins, strapped-in as co-pilot in an S-3 on that fateful day. We were cruising along, doing our surveillance-thing, minding our business high above international waters. I was monitoring instruments and also keeping an eye out of the cockpit window. And then… Whoa! (Aka, “Holy Sh!t!”):

Iranian Air Force/McDonnell-Douglas F-4 Phantom

Out of nowhere, an Iranian F-4 Phantom appeared on the right side. This airplane was a legacy of the days when the U.S. and Iran got along much better, back in the days of the Shah in the 1970s, and the U.S. sold top-end aircrafts to that country.

Well, now (this was 1985, remember) the Iranians didn’t much like us, yet were armed with our own, made-in-USA equipment. And this brown bird was fast closing the distance towards us. My training kicked in and I yelled, “Fox Four Phantom! Starboard! Three O-Clock! Break right!”

That Lockheed S-3 could haul a lot of weapons, like bombs, rockets, torpedoes and more. But one thing we didn’t have was guns or air-to-air missiles. Nope, nobody ever figured out how to hang a Sidewinder onto the racks. So, it wasn’t like we were going to dogfight with this guy.

Meanwhile, the McDonnell-Douglas F-4 had more speed in the horizontal plane, as well as way more thrust to climb vertical, although the S-3 had better maneuverability.

Quickly we banked our aircraft into the face of the F-4, rolled inverted and dove for the deck while broadcasting our situation on Navy channels.

If you’re curious, we didn’t turn away from the F-4; no, because he was faster, had guns and missiles, and we would have just presented him with a juicier target, especially the hot exhaust from our engines.

But gravity can be your friend, so we plummeted downwards, full throttle and at the speed of heat. The F-4 remained above us, turning and rolling. He tracked his radar at us, and apparently lost us in the ground-clutter.

All this, and our Navy colleagues in their mighty F-14 Tomcats, also from the Constellation, had a field day: they went to afterburner, broke the sound barrier, screamed in towards the Phantom, blazed their radars, armed missiles, energized gun system, and counted the seconds until they could qualify for an Air Medal by splashing a bad guy.

Prudently, the Iranian F-4 pilot — no fool, he! — turned his airplane away, hit the throttles and made a beeline back into Iranian airspace.

Of course, we weren’t at war with Iran. And likely, nobody was really up in the sky that day with the mission to shoot anybody down. But you never know, right?

It’s Not What You See, It’s What You Don’t See

Okay, so what the hell happened? How did we get jumped by a Phantom?

Hey, guess what? Iran has people who study weather, and they too know all about haze layers in the Gulf. And one of their aerial tactics is to determine where the U.S. surveillance aircraft are (in our case, a Navy/Grumman E-2 Hawkeye radar plane), and then figure out how to hide under the dust blankets.

That is, the U.S. radar surveillance plane was flying at a certain altitude, and emitting signals. The Iranians quickly figured out where to find a haze layer that would mask their F-4 from the waves. And the Phantom cruised in towards us, undetected until visual contact. (It’s much like how a submarine can hide just beneath certain temperature or salinity layers in the ocean.)

Et Voilà! That’s how the Phantom got so close to us that nobody in the E-2 saw him on radar and sent out an alert, and it was only my eyeball that picked him up.

Which brings us back to that lesson I mentioned above: do NOT underestimate the opponent.

No matter how good you might think you and your people are, the other guys have brains as well. They can think, too. They’re not stupid, okay?

Which brings us back to the Oct. 7 attack on Israel; entirely unexpected, per press releases, such that the current explanation is that the fiasco was a so-called “intelligence failure.”

Some failure. Hamas says it began planning its attack two years ago. Undoubtedly — because this is how planning works — there were tens of thousands of discrete decision- or action-points along the way. That is, just consider how planners must have developed the idea, identified necessary people and equipment, acquired materiel, gathered target intelligence, trained, trained, and trained some more. And then executed the mission.

Yet, there were no leaks? Ever? Or did the other side just understand how to do its thing and hide it all under the haze layers and dust, so to speak?

Meanwhile, it’s no stretch to say that the Oct. 7 attack was not a solitary event. It was not just a giant camp-raid, like one tribe attacking another in ancient times. Not one-and-done; not at all.

Every Action Creates a Reaction

In fact, you should consider that the Oct. 7 event was the kickoff of a larger operation. It was Day One, the opening pitch, so to speak; all apparently designed — the fury and raw brutality — to elicit a massive reaction from Israel, which we’ve seen in the bombs and artillery Israel has already dropped onto Gaza.

In other words, the military goal of Oct. 7, of Hamas contra Israel, was not just the action; it was to create a reaction.

Again, to use that dust haze analogy with the F-4, above, it’s time to ask what is it that we are not seeing? What is the hidden agenda?

Well, things have yet to unfold, right? Events shape other events. Thus, we must await future developments.

Immediately after Oct. 7, Israeli authorities spoke — “promised” is more accurate — of “unleashing hell” on Gaza, and it’s fair to believe that such is exactly what Hamas wants. The ultimate goal of Hamas is to transform Israel from a victim of Oct. 7 into the bad guy in terms of disproportionate reaction.

Future possibilities are wide open. Israel could level Gaza with bombs and artillery, but also sow the seeds of world outrage. Or Israel could roll tanks and troops into Gaza, and there encounter a modern Stalingrad. Then there’s the possibility of a second front in the north, confronting the well-armed Hizb’Allah in Lebanon. All this and more.

And speaking of aircraft carriers, the U.S. now has two of them — plus escort and support ships — in the Eastern Mediterranean Sea, which is thoroughly bracketed, and easily targeted, by Russian long-range antiship missiles in not just Syria, but from the Russian homeland as well.

Coverage map of Eastern Med by Russian Antiship missiles; courtesy of Andrei Martyanov.

Oh, how military planners everywhere must be burning buckets of midnight oil! And to cite that famous line attributed to Leon Trotsky (1879 — 1940), “You may not be interested in war, but war is interested in you.”

Trotsky meant that war creates a geopolitical vortex that sucks in entire communities, and eventually even nations near and far. In the case of Israel and Gaza/Hamas, we see the effects of conflict have already cascaded out, far from that slice of desert where the events occurred.

Across the Middle East, there’s outrage at Israel which also extends throughout the Islamic world, from Europe to Indonesia. And certainly, the anti-Israel Islamic view has deep roots in even U.S. politics and culture, if “the Squad” on Capitol Hill and college campuses across the U.S. are any indication.

What’s Under that Haze Layer?

In other words, right now the Israel-Hamas conflict has dialed the world up into the eleventy-seven level of outrage, one way or the other. Indeed, Israel-Hamas has all but deleted the war in Ukraine from the front pages, while the China-Taiwan unpleasantness receives nary a concern.

And consider how the entire Middle East imbroglio now plays out in a world of BRICS (Brazil, Russia, India, China and South Africa), which has more recently transformed into BRICS-OPEC, a combination of nations that truly control the global energy supply.

We no longer live in that warm, fuzzy, post-Cold War world of the 1990s, back when the U.S. was the global superpower, with Russia but a shell of its former Soviet power.

No, we now live in a world where Russia is militarily powerful in every respect (despite the arrant nonsense and propaganda you might see about how Russia is weak and growing weaker); and also, a world in which the world’s number-one industrial power is China, by every metric from steel output and shipbuilding to control over rare earths and global shipping.

In other words, this is no longer a world in which the U.S. can act unilaterally and with near-endless power, heedless of potential reactions by other nations. No, the U.S. is deep in debt, paying gigantic interest payments every month, politically crippled in many respects, and with an industrial base that cannot churn out even basic artillery ammunition in anything like sufficient amounts to fight a war. This isn’t your U.S. post-World War II.   

De-Risking for the Future

Right now, under the circumstances we see, it’s time to de-risk. Book gains on some of your high-flying “tech” stocks (I hate that description, “tech”) because it’s about to become a tough global environment for companies that don’t produce real things like energy, materials, useful machines and the like.

Green energy is a political fad that is fast being exposed as a fraud, per principles of both physics and finance. So, avoid the windmill and solar hype. And while we’re at it, we’re about to see much of the electric vehicle (EV) razmataz head south as well. Just look at the shockingly bad numbers for a company like Ford Motor, which loses $60,000 for every EV it sells, per one account.

Get back to basics with main line, integrated oil companies; ExxonMobil (XOM), Chevron (CVX) and Conoco Phillips (COP) come to mind. Plus look at oilfield service companies like Schlumberger (SLB) and Halliburton (HAL) and toss in an offshore drilling play like Transocean (RIG) for good measure.

Meanwhile, go for precious metals, meaning gold in particular but silver and platinum groups as well. If you don’t own at least some physical gold and silver, get thee down to a coin shop and acquire some!

In the stock space, look at the two really big gold miners: Barrick Gold (GOLD) and Newmont (NEM). Both will do quite well as money migrates from overpriced ends of the market into the relatively small gold space.

Also, consider basic mineral plays like Freeport McMoRan (FCX), which produces significant gold along with copper and more; and Rio Tinto (RIO), another massive copper producer that delivers gold and silver from the smelters as well.

Getting back to basics in investing is key because frankly, there’s no telling what might happen tomorrow, next week, next month. Israel is going to do what Israel is going to do; and so is Hamas, Hizb’Allah and Iran.

But one thing is for sure: we will continually be surprised by what we didn’t see coming. And that’s because all manner of things hide just under the haze layer and we might never see them until they are right outside the cockpit window.