Trump Made 38 Iran Peace Deal Promises. The 39th May Be Real -- but Before You Reposition Your Portfolio, Read This

A peace deal between the U.S. and Iran is at hand. The critical Strait of Hormuz should soon reopen fully. Oil prices will finally pull back to lower levels, easing the inflationary pressure that's stretching many Americans' budgets.

We've heard something like this before. Actually, according to an analysis by CNN's Aaron Blake, we've heard it 38 times before. Blake recently documented more than three dozen times when President Trump claimed that a deal with Iran to end the war was close.

The count is now at 39. This time, though, the U.S. and Iran have signed a preliminary peace deal for the terms of which remain unknown. Should investors reposition their portfolios in response to the good news? It's smart to understand what's going on first.

Image source: Official White House Photo by Joyce N. Boghosian.

Familiar moves

Following several of Trump's numerous past proclamations that peace was at hand, the stock market made similar moves. Energy stocks fell as oil futures sank. Many other stocks, though, particularly consumer discretionary and tech stocks, gained.

However, in those instances, investors soon realized that no deal with Iran was imminent. Oil prices rebounded, with energy stocks moving in tandem.

Some traders even developed a strategy for profiting from what became a familiar pattern. You could call it the "GHOSTS trade" -- Go High on Statements Then Sell.

So far, we're seeing a similar initial market reaction with the latest peace deal announcement. Oil prices have fallen. So have energy stocks. Meanwhile, consumer discretionary stocks have risen modestly, and tech stocks have resurged.

Is the 39th time the charm?

Is the GHOSTS trade finally dead? Will the 39th time Trump has claimed that a real peace deal is near be the charm? The best answer is... maybe.

Importantly, the "deal" discussed is actually a memorandum of understanding (MOU). Under this MOU, the U.S. will halt its naval blockade of Iranian ports while Iran will reopen the Strait of Hormuz for 60 days. During this period, U.S. and Iranian officials will attempt to negotiate a more permanent peace agreement.

The MOU could very well lead to a lasting peace deal. Both the U.S. and Iran (as well as other countries around the world) want the Strait of Hormuz reopened. Iran wants access to billions of dollars of funds that have been frozen for years. Trump and the GOP want oil prices to fall and, hopefully, moderate overall inflation before the mid-term elections in November.

However, there are quite a few huge obstacles that could get in the way. Perhaps most importantly, Israel isn't involved in the peace discussions. Continued fighting between Israel and Iranian-supported Hezbollah in Lebanon could cause Iran to again close the Strait of Hormuz.

Trump loudly criticized former President Barack Obama for releasing $1.7 billion in frozen funds as part of a nuclear deal, and he nixed the deal in his first term. He could be reluctant to move forward with any peace deal that involves giving Iran a lot of money, but Iran may make this a key prerequisite for any agreement.

Iran will also likely insist on being able to move forward with its nuclear energy program. But the Trump administration said that the reason behind the initial attack on Iran by the U.S. and Israel was to deter its nuclear capabilities. The two sides could find it difficult to reach a compromise on this issue.

Investors' smartest strategy

What should investors do? For one thing, keep in mind that the Iran war is one of multiple factors influencing the economy and the stock market. Artificial intelligence (AI) infrastructure spending, interest rates, stock valuations, and tariffs are just a few that could move markets even if a firm peace deal with Iran is finalized.

Regarding Iran, don't overreact to events that are still unfolding. While Middle East risks may be lower now, they haven't disappeared. There's a big difference between a 60-day ceasefire based on a somewhat murky MOU and a firm peace agreement that all impacted parties can live with.

Investors shouldn't drastically reposition their portfolios solely because of rhetoric. Look for signs of real and lasting diplomatic progress. It's still quite possible that the 39th promise that peace is at hand won't be the last one.

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