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For the first time in years, Iraq news is moving the markets again. Turkish stocks took a beating on Wednesday, with the iShares MSCI Turkey ETF (NYSEARCA:TUR) shedding 5.2%.

The apparent reason? Armed militants from the terrorist group the Islamic State in Iraq and Syria ("ISIS") seized the Turkish consulate in Mosul, taking the consul and his staff of nearly 50 people hostage. This follows a separate incident in which ISIS kidnapped and held for ransom about 30 Turkish truck drivers working in Iraq.

The fear is that Turkey will get pulled into what is now a low-grade civil war in Iraq.

Could it happen? Of course. But as an investor, it is not something I'm particularly worried about. In fact, I would even view it as a potential opportunity.

I genuinely hope that the Turkish citizens are returned without bloodshed. But let's say that the situation deteriorates and Turkish tanks roll across the Iraqi border in retaliation. What then?

A Turkish invasion of Iraq would, at least temporarily, stop the internal instability that caused investors to dump Turkish stocks and other financial assets this time last year. Nothing unites a divided country like an external enemy.

Furthermore, Turkey's military is the largest in Nato after that of the United States, and unlike American soldiers-who have a difficult time winning the "hearts and minds" of locals due to being Western and predominanatly Christian-Turks are coreligionists with the Sunni Muslims they will potentially be invading. So, a Turkish invasion is unlikely to devolve into a messy quagmire.

Finally, let us remember that while terrorism is an awful thing for a country to have to endure, its effects on the financial markets tend to be short-lived.

Action to take: Go long Turkey via the iShares MSCI Turkey ETF (TUR). Take an initial one-half position, and wait another 1-2 weeks to see if the situation escalates. If we see more short-term weakness in Turkish stocks, so be it. We can average in at a lower price with the second half of the trade. And if this week marks the low, no worries. We'll end up buying the second half of the position at a slightly higher price. Plan to hold for 6-12 months and use a 15% stop loss on your average cost basis.

Disclaimer: This site is for informational purposes only and should not be considered specific investment advice or as a solicitation to buy or sell any securities. Sizemore Capital personnel and clients will often have an interest in the securities mentioned. There is risk in any investment in traded securities, and all Sizemore Capital investment strategies have the possibility of loss. Past performance is no guarantee of future results.

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Source: Terrorism In Iraq And Turkey: How To Trade It