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The Market’s Shake-Up Amid the Iran Conflict Has U.S. Stocks Looking “Extremely Cheap,” Says Bill Ackman

When geopolitical tensions flare up, the stock market usually doesn’t handle it with much grace. The recent escalation in the Iran war is a perfect example. Markets wobbled, headlines went wild, and investors hit the exit button—once again. This panic has pushed some of the best-performing U.S. stocks to levels that hedge fund legend Bill Ackman calls “extremely cheap.” But is he onto something? From my experience, moments like these often reveal more about investor fear than the actual health of companies.

Why the market panics (and why you shouldn’t always follow it)

This isn’t just fear—it’s uncertainty that’s rattling investors. People hate the unknown even more than bad news. When conflict erupts in the Middle East, worries about rising oil prices, supply chain headaches, and cyberattacks suddenly feel very real. The instinct? Sell first, ask questions later.

Here’s the catch: a company’s fundamentals don’t usually deteriorate as fast as stock prices do. Many investors, especially those relying heavily on algorithms or momentum trading, get tossed around in this volatility, missing the bigger picture. Ackman, on the other hand, is a classic value investor. He watches for these panics like a hawk, ready to swoop when the panic sells off solid businesses.

“Extremely cheap” stocks: What does that really mean?

I’ve seen this before—during the oil crash of 2014-2016, and the early days of the pandemic. When fear peaks, globally dominant U.S. stocks often go on sale, even if they’re barely touched by the actual conflict. Right now, giants like Apple, Microsoft, Google, and Amazon have price-to-earnings (P/E) ratios below their long-term averages, all while continuing to post solid earnings. That’s what Ackman calls “extremely cheap.”

His reasoning is straightforward: The U.S. still leads the global economy. These companies have strong balance sheets and the pricing power to pass on cost increases to customers. Even with a war halfway across the world, they’re rarely the ones taking the biggest hits. In fact, they often benefit from investors fleeing riskier assets to the safety of the U.S. dollar and the S&P 500.

But let’s be honest—jumping in headfirst isn’t always wise. “Cheap” stocks can get cheaper if things take a turn for the worse or if financial turmoil spreads. Timing the market perfectly? That’s a challenge even pros struggle with.

When “cheap” might not be cheap enough

There are a couple of important things to keep in mind. First, not all U.S. stocks are equal. The “extremely cheap” tag only fits if earnings remain solid. Some sectors suffer more from war-driven shocks. Airlines and logistics companies, for example, run on razor-thin margins and can’t just pass soaring fuel costs onto customers. Regional banks—already facing pressure from higher interest rates—could see credit risks rise if commodity prices spike or emerging markets stumble. These ripple effects often catch investors off guard.

Second, the Iran conflict isn’t the only thing on investors’ radar. Inflation is stubborn, the Fed is cautious about cutting rates, and U.S. consumer debt is at record highs. If the conflict spreads, oil prices could rocket past $120 a barrel, fueling inflation and forcing the Fed to keep rates high. That kind of stagflation is tough on stocks—cheap or not—and could turn today’s bargain into tomorrow’s value trap.

Why the market freaks out — and how to keep your cool

Fear sells, and the media knows it well. When conflict erupts, the story shifts from company fundamentals to sensational headlines. Most investors get swept up in the panic. Algorithms scan the news and dump shares blindly. That’s why even blue-chip tech companies with hardly any exposure to the Middle East or oil can suddenly fall alongside those with real risks.

The key is to pause and ask yourself: What actually changed for the companies I own? Are their supply chains vulnerable? Will demand dry up? Can they pass on higher costs? If the answers are mostly positive, then market panic might be your entry point.

I’m not saying ignore the risks. If you hold stocks in sectors like semiconductors or chemicals, it’s worth double-checking any ties to the Middle East. Geopolitics has a way of exposing hidden vulnerabilities. But for the most part, U.S. mega-caps are shielded by their size and global reach. They often come out stronger after crises, especially when weaker competitors falter.

The Ackman approach—does it work for everyone?

Let’s be real: Bill Ackman operates with billions and insider-level research. His “extremely cheap” call comes with deep analysis and the patience to ride out market swings. Most everyday investors don’t have that luxury. I’ve seen promising investors shaken out too early because they overestimated how much volatility they could handle.

Also, don’t forget opportunity cost. If you buy based on Ackman’s thesis and the market takes years to recover, your money is locked in, missing other opportunities that might offer steadier or better returns. Value investing works best if you have the patience to wait—sometimes for a long time.

How to approach the market now

If you agree with Ackman that world-class U.S. stocks are “extremely cheap” right now, take it slow. Don’t throw all your chips in at once. Dollar-cost averaging can help you ride out the volatility. Focus on companies with strong balance sheets, diverse income sources, and a history of handling shocks well.

Keep some cash or short-term Treasuries handy. If things escalate, having dry powder can make all the difference. And once you’ve got a plan, try to tune out the headlines. Emotional reactions often cause more harm than good.

Whether this market wobble is short-lived or the start of a longer slump, fundamentals will come back into focus eventually. If you pick wisely and keep your nerve, you’ll be in a good spot when things settle down.

Bottom line: “Extremely cheap” isn’t a promise—it’s an opportunity, with risks attached. The market rewards those who prepare and stay disciplined, not those who panic.

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