|Prime Minister Benjamin Netanyahu met recently with President Obama to discuss Iran's nuclear program.|
The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage. By Gregg Schoenberg NEW YORK ( TheStreet) -- At some point during 2012, Americans may wake up to learn that Israeli jets loaded with "bunker busters" have descended on Iran's nuclear facilities. We may also learn that Israel will have paired these strikes with cyber initiatives and other measures in an unprecedented display of tactical ingenuity. America's role may be unknown at first, but Iran's response would deepen the sense of crisis regardless. Missile strikes by Iran and its proxies against Israel may be the first response, followed by a potential widening conflict and potential Iranian blockage of the Straight of Hormuz.
In recent months, an increasing number of portfolio managers have been handicapping the probability of the scenario above and whether this country will be heading into a new Middle East conflict. The analysis is complicated by the lack of historical parallels to the current situation. First, previous Israeli strikes against the nuclear facilities of Iraq in 1981 and in Syria in 2007 surprised the world. Second, the Arab Spring upended many long standing assumptions about Islamic solidarity in the Middle East. And third, And third, Iran is currently facing unprecedented isolation within the community of nations. Some investors have chosen not to modify their portfolios on the basis that leading world powers will find a way to avert a preemptive Israeli strike for now. The resumption of talks between Iran and the UN's Permanent Security Council plus Germany buttress hope that this outcome will come to pass. Recent comments from Obama administration officials and Israel's former spy chief, Meir Dagan, have furthered the view that Israel will exercise restraint. Others have concluded that a strike before year's end is a probable outcome given the Netanyahu government's growing impatience with Iran's use of North Korea's "play-for-time" playbook. For investors with this viewpoint, adding exposure to oil, Treasuries, the dollar or gold might be a logical step. If there were an attack, equity markets worldwide would likely swoon on fear of the unknown. However, as markets digest the news and events unfold, credible scenarios exist in which a Middle East war or a sustained crisis in the Strait of Hormuz fail to materialize.