Best bet amid Middle East turmoil? Short peace, says Cumberland boss

Cumberland Advisors, which manages $1.5 billion in separately managed accounts, has shifted its portfolio to 20% cash—the highest its been since early 2008, over fears regarding the situation in Egypt.
With protests in Egypt now in their 14th day, managers at Cumberland and other firms are growing more and more concerned about the situation and its implications for the entire region.
“Everyone is asking questions about inflation and interest rates, but the biggest thing going on right now is the Middle East,” said David R. Kotok, chairman and chief investment officer of Cumberland Advisors, in an interview at IndexUniverse.com’s Inside ETFs Conference. “My biggest fear is that the Middle East blows up, there is bloodshed and civil war,” Mr. Kotok said. “Saudi Arabia is very concerned about this.”
The big unknown, Mr. Kotok said, is who will take over in Egypt — and what role Iran may play in that decision. From an investing standpoint, the ongoing uncertainty will be good for the energy sector, he said. “We are overweight energy and oil through four different ETFs,” he said. Any more chaos in the Middle East will lead to higher oil prices, and Mr. Kotok said he doesn’t foresee any possibility that peace will take over the region. “History is on my side,” Mr. Kotok said.