Thoughts on the Market, by Andy Krieger

June 22, 2026

The vast concentration in the equity markets does not simply refer to the limited number of companies dominating the overall market capitalization.  It also refers to the astonishing size of the total equity market capitalization relative to the U.S. GDP.

What Happens If Equities Fall 35%?: A Thought Experiment on Equity-Market Concentration, Fiscal Fragility, and a Compounding Oil Shock, with Analysis of the 2026 Iran War and Its Realized Economic Effects

Executive Summary

This report examines a hypothetical 35% U.S. equity market decline from current levels, and a compounding scenario in which an Iran-driven oil price shock strikes simultaneously. When I first considered this global event in June of 2025, the second scenario – about an Iran-driven oil price shock -- was illustrative. It is no longer. On February 28, 2026, the United States and Israel launched coordinated strikes on Iran under Operation Epic Fury, killing Supreme Leader Ali Khamenei and destroying much of Iran’s military and nuclear infrastructure. Iran responded by closing the Strait of Hormuz, through which approximately 25% of the world’s seaborne oil and 20% of global LNG ordinarily flow, triggering what the International Energy Agency described as the largest supply disruption in the history of the global oil market. A memorandum of understanding ending hostilities was signed June 17, 2026, and negotiations are ongoing within a 60-day deadline; the ceasefire is fragile and shipping through the Strait remains far below pre-war levels as of this writing. The oil shock has already done its damage to the macroeconomic setup.

The goal of this report is not to predict whether or when the equity decline described here occurs, but to map the transmission channels and to ask whether the U.S. economy, after absorbing the Iran war and its economic aftershocks on top of an already-stretched fiscal position, is more exposed to equity-market swings today than at any point in its history.