"The gathering storm"

Yesterday, George Will wrote a column “In Netanyahu, Israel has its own Churchill.” (IBD, Aug. 12, 2010, p. A11) He pointed out that Netanyahu has two pictures in this office, one of Theodor Herzl and one of Winston Churchill. “Netanyahu,” Will writes, “his focus firmly on Iran, honors Churchill because he did not flinch from facts about gathering storms.”

About a year ago, I wrote an essay for Euromoney entitled “The hedgehog and the fox,” harkening back to Sir Isaiah Berlin’s theory that there are two types of personalities, that of the fox, who knows many things, and that of the hedgehog, who knows one big thing. Netanyahu and Ahmadinejad are hedgehogs and Obama is a fox. The one big thing Netanyahu knows is that Iran must be stopped before it has effective nuclear weapons and Ahmadinejad knows he has to have them. Assume, therefore, a 50/50 chance that Israel will attack Iran within the next year and that the US will intervene to reopen the Straits of Hormuz after Iran closes them. How should this possibility affect one’s investment policy?