MW How a contrarian trade can help you as an investor stay ahead of the Israel-Iran conflict

By Philip van Doorn

Also: An AI reminder, good timing for retirement annuities and where home sellers are most likely to cut prices

As President Donald Trump decides whether or not the U.S. will join Israel's attacks against Iran, investors and traders have been considering the scale of a possible disruption to the international oil market. Iran's government might attempt to block shipping through the Strait of Hormuz, which saw a daily average of 20.9 million barrels of oil in 2023, "the equivalent of about 20% of global petroleum liquids consumption," according to the U.S. Energy Information Administration.

The obvious trade would be to invest in oil-delivery contracts directly or by holding shares of funds that track oil prices or energy stocks. Examples include:

-- The U.S. Oil Fund LP USO, which holds near-term oil futures. Its limited-partnership structure means unit holders' income, capital gains and capital losses are reported on a Schedule K-1. This can make for more complicated tax-return preparation than the more common 1099-DIV form used to report corporate shareholders' income.

-- The Invesco DB Oil Fund DBO, an exchange-traded fund that tracks an index with a long name - the DBIQ Optimum Yield Crude Oil Index Excess Return. According to FactSet, rather than just rolling front-month delivery contracts for West Texas Crude CL00 CL.1, DBO "optimizes exposure to the curve to combat contango by rolling into whichever contract month (within the next 13) looks most attractive by its rules." Contango is a market condition under which futures prices are higher than spot delivery prices.

-- The Energy Select Sector SPDR ETF XLE, which holds all 23 stocks in the energy sector of the S&P 500 SPX, weighted by market capitalization. This means that Exon Mobil Corp. XOM and Chevron Corp. CVX together make up 39% of the XLE portfolio.

During an interview with Joseph Adinolfi, Marko Papic, chief strategist at BCA Research, said that if Iran blocks the Strait of Hormuz in an attempt to disrupt the world oil market, investors should look further ahead, beyond the obvious, and do these two things.

Related coverage:

-- What the Gulf War and past supply disruptions says about how high oil prices can go

-- Why Trump's Tehran warning in Israel-Iran conflict isn't rattling stocks or creating a crisis in oil prices

-- This oil gauge signals how nervous investors are about Trump's warning to Iran

Don't forget about this generational investment opportunity

There is so much coverage of generative artificial intelligence and its incorporation into so many products and services that investors might be taking this technological leap for granted. When interviewed by Barbara Kollmeyer for the Need to Know column, Patrick Kelly, who co-manages the Alger Focus Equity Fund ALAFX, said this particular AI industry would "probably dwarf the size" of the market for smartphones. The Alger Focus fund has a five-star rating (the highest) within Morningstar's large growth category.

The Need to Know column provides insights every business morning for investors and traders, with comments from professional money managers. You can sign up here to have it waiting in your inbox.

Related coverage: Amazon CEO says AI will mean fewer jobs at the company. Here's his advice on how people can keep theirs.

A look at retirement annuities - which are attractively priced at the moment

People who are ready to wrap up their careers and have built up retirement accounts face decisions on how to make sure their money will generate enough income for them to live on. And those choices can vary over time. Brett Arends explained how recent bond-market trends have set up an ideal pricing environment for annuities. You might be able to convert some or all of your retirement account into an annuity that provides an income yield of more than 7% for the rest of your life. But annuities aren't for everyone. Arends broke down the decision points and pricing factors.

More from Brett Arends:

-- $66 billion in taxpayer money is getting sucked into this Medicare Advantage black hole

-- The secret to a longer life could be this old-fashioned English breakfast

Where to find the best discounts in the buyer's market for homes

Aarthi Swaminathan covers the residential real-estate market. This week she listed U.S. housing markets with the largest percentages of home sellers lowering their prices.

Read on: More builders slash prices as home buyers stay away from the housing market

The Moneyist has advice on how to help the next generation

Quentin Fottrell - the Moneyist - helped a woman concerned that if she left money to her niece, the inheritance might be mismanaged.

More from the Moneyist:

-- How can I give my beloved niece a home in her name only - without alienating or upsetting her husband?

-- I'm 75 and have a reverse mortgage. Should I pay it off with my $200K savings - and live off Social Security instead?

-- I'm in my 80s and have two children. How do I choose between them to be my executor?

Gold has been a hot trade. This metal has soared even more.

Myra P. Saefong looked into a fascinating development in trading markets for precious metals.

Related: Gold is the new 'risk-free' asset as Israel-Iran conflict rattles investors

Individual investors are making two moves to diversify and fight inflation

One might think gold and virtual currencies have little in common. But Gordon Gottsegen explained why many individual investors are embracing both.

For individual investors: Meme stocks and Robinhood users show why long-term investing is your best bet

How about a Trump Phone - or at least Trump Mobile service?

On Monday, President Trump's sons Donald Trump Jr. and Eric Trump rolled out Trump Mobile - a new mobile-phone service with a competitive monthly price, especially when you factor in extra services that other carriers charge for. You can use your own phone with this service or opt for a Trump-branded gold phone when it is made available.

Jurica Dujmovic addressed the controversy surrounding this type of service being offered by the president's family. But he also looked deeply into what customers will get for $47.45 a month, while addressing concerns over data security. Here are 10 things he learned about Trump Mobile.

Want more from MarketWatch? Sign up for this and other newsletters to get the latest news and advice on personal finance and investing.

-Philip van Doorn

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

June 20, 2025 12:21 ET (16:21 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.