Had anyone asked back in January what kind of risks you thought might be giving financial markets a jolt by mid-year, odds are that you would have talked about the Federal Reserve's intentions with respect to quantitative easing, the outlook for economic growth and whether S&P 500 companies are delivering the kind of earnings that analysts had been expecting.
Perhaps, given recent history, you might have thrown out an additional concern: That some unforeseen event in Spain or Italy might buffet the Eurozone and spill over into North American markets—after all, that has become an almost routine summertime occurrence.
A military ouster of Egypt's government probably wouldn't have been high on your list.
That is the problem with geopolitical events, in a nutshell. They tend to fall into the category that former Defense Secretary Donald Rumsfeld famously referred to as "unknown unknowns": They can't be predicted.
But they can roil markets and leave unwary investors with large losses. The key to surviving geopolitical market turmoil is to understand the different forms it can take, and, when possible, take action to limit your exposure and your risk.
When you know there could be a problem
This is the kind of situation confronting investors with the European fiscal crisis, now in its third year.
Clearly, the nations on the periphery of the Eurozone continue to grapple with intractable problems: heavy national debt loads, astonishing unemployment levels (as many as half of all those under 25 in some nations are jobless), the prospect of a banking sector meltdown and all the political turmoil associated with that.
Nor is it as if we can take refuge in the "healthier" economies in Europe, as the problems on the periphery are taking a toll on countries like France, Germany and the Netherlands.
It's in that context that Portugal has just delivered an electric shock to financial markets in Europe, in the wake of the resignation of the country's finance minister on Monday and more resignations likely to follow, putting in question the fate of Portugal's coalition government.
That could trigger a nasty chain of events, with questions about the Portugal's ability to deliver the fiscal reforms it promised as part of its financial bailout.
Can you anticipate this kind of geopolitical tension?
Sure. Ever since the Greek crisis raised its head, economists and market analysts have been scrutinizing the fiscal positions of European nations, even as their financial markets have sold off.
By now, there are myriad ways to approach this: limiting exposure to volatile nations, while investing mostly in companies whose fate isn't tied to what happens in the Eurozone.
Above all, it's a matter of steering clear of Eurozone banks, whose fate remains unclear as policymakers try to devise a long-term solution to the problem.
When there's a problem that may or may not affect financial markets
In many ways, this is the toughest category to contemplate. We know that there is a horrific civil war underway in Syria, for instance, and that there are geopolitical tensions between North Korea and Japan.
But neither Syria nor North Korea has ever been an investible market, and no one investing in Japanese stocks or bonds would seriously consider not doing so because of the remote chance that the war of words (and the occasional harmless North Korean missile) will suddenly turn into a real shooting war.
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But these kinds of conflicts can affect markets in different ways. In the Middle East, regional alliances are an issue. The Syrian conflict is an example of that, with great powers like Russia and Iran having a kind of "proxy" interest in the outcome.
There really isn't much you can do, other than monitor developments and be aware that saber-rattling may increase volatility in the market. Some options might include using options on volatility to manage that risk, or being prepared to turn to safe haven investments should the headlines get truly ugly, at least temporarily.