Even though the fire of war may be extinguished, the aftermath is difficult to settle! Former CEO of Goldman Sachs warns investors not to be overly optimistic about the situation in the Middle East.

Goldman Sachs senior chairman and former CEO Lloyd Blankfein recently issued a warning that even if the conflict with Iran could be resolved "tomorrow," the damage caused would "continue to exist," and urged investors to prioritize emergency plans during the turmoil. On Wednesday, Blankfein said in an interview that some market participants may be too optimistic about the conflict. He also stated that betting on "everything will eventually calm down" and asserting that "there will never be an end to the conflict" are both dangerous trading strategies. Discussing the Middle East conflict, he said, "Everyone is aware that even if the fighting stops tomorrow, the damage to infrastructure will continue to put pressure on the market for a longer time. Moreover, there is currently no sign that the conflict will turn around in the short term." On February 28, the U.S. launched strikes against Iran, quickly escalating to a regional war. Iran then launched attacks on neighboring energy facilities, causing severe disruption to global oil and gas key shipping lanes such as the Strait of Hormuz. Blankfein pointed out that in recent weeks, the energy market has been severely shaken, as investors are trying to digest the impact of the conflict and price in the long-term consequences of the global oil supply disruption. In this context, he advised investors to abandon firm one-sided trading strategies and adopt more cautious operations, maintaining a "highly flexible, strict risk management" in their positions. "You can set up hedging strategies, but once the situation changes, these hedge positions may become worthless overnight," Blankfein said. "Investors must have a thorough emergency plan in place." In this extensive interview, Blankfein, who steered Goldman Sachs during the 2008 global financial crisis, also discussed the overall financial situation in the United States and the risks hidden in the private equity market. He stated that before the outbreak of the conflict with Iran, the investment environment was originally "more positive than negative," with steady economic growth and a clear downward trend in interest rates. "But now, these factors have given way to the situation of war and energy price trends, significantly reducing their importance." At the same time, he believes that doubts remain about the accurate valuation of private equity market fund portfolios, as these assets have not undergone the same rigorous testing as the stock market. "The market will eventually face a reckoning - one that we have not yet experienced. The longer the interval between reckoning, the potential consequences may be more severe," he added.