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The sabres are rattling so hard that I can feel my teeth chatter. A nuclear weapon armed Iran is an unacceptable situation to many countries around the world-most of all Israel.

The U.S. stock market is off to a robust start in 2012. The Nasdaq is now up about 14% year-to-date, the Dow is flirting with 3,000, and the Emerging Markets have been on fire lately.

In my newsletter last week, I included a table that shows that India is up 26.8%, Russia is up 26.3%, Brazil is up 22.5%, and China is up 15.5% so far in 2012. Even troubled Europe is up 10.6% YTD.

All seems to be well in the equities markets here at home and across the globe. As a professional money manager, I have to play the "what-if" game every day of my life. I am responsible for a lot of money that is very important to my clients.

Right now, I am fully invested and I am busy "making hay, while the sun is shining." I am having a great year for my clients. I have to ask myself however, what if I wake up tomorrow to the news of Israeli warplanes striking sites in Iran?

It seems that the likelihood of this happening is increasing by the day. Will Iran just roll over and cease their nuclear ambitions if a strike does occur, or will they turn to their friends to help in retaliation? I think we can look around and be able to determine who their friends are.

This is a very sobering thought. On the one hand, the market is going well right now, and folks are making good money once again. On the other hand, we all need to play the "what-if" game right now.

I have my own grading system wherein I rate and grade around 2,800 different stocks, ETFs, commodities, asset classes, inverse funds, etc. I watch daily for movement one way or another for some kind of clue to start to take cover.

The inverse funds, which are at the bottom of the heap would start rising, aggressive stocks would start falling, gold would start rising once again, and oil would more than likely start to really heat up.

I have a plan, and I stand ready to implement it if necessary. I obviously hope that it will not be necessary, however. One of the key parts of my plan would be to increase my exposure to oil stocks, especially dividend paying ones.

We learned in 2008 that dividend payers hold up a whole lot better during a market sell-off. In fact, the stock that I am going to talk about here was actually up 4.3% in 2008, while the S & P 500 was down 38.5% that year. Here is an example of a stock that should continue to flourish, come what may.

B P Prudhoe Bay Royalty Trust (NYSE:BPT) is a $2.63 mid-cap stock that has cranked out almost unbelievable returns to its investor over the last 1, 3, 5, and 10 years. Here is what the performance looks like:

Data from Best Stocks Now App

As you can see, BPT has delivered average total returns of 40% per year (inclusive of dividends) over the last ten years. During this same period of time, the market has delivered just 1.6% per year.

Over the last 3 years, the stock has continued to crank out average annual returns of 46.5% per year, while the S & P has delivered 25.5% per year.

BPT is up another 16.6% over the last twelve months, and the stock has been very strong since last October as oil prices continue to rise.

My proprietary grading system loves performance, but it also takes into account value. There is currently not any analyst estimates that we can project target prices with, but the stock currently has a PE ratio of 13, which is cheaper than the market.

Data from Best Stocks Now App

Out of the 2,786 stocks that I follow, BPT currently comes in at #63 and gets an overall grade of A. I only buy A- rated stocks or better. I usually find them in my top 200.

There are a lot of ways that investors can be prepared for a possible shock to the market. A heavy cash position may be desirable at some point. Inverse ETFs may be a good way to hedge. Oil and oil stocks should continue strong.

In the meantime, keeping making hay while the sun shines in A graded stocks, see articles all over the web that I have written for ideas, and pray for a resolution to the current situation that is brewing in middle-east.

Source: Preparing Your Portfolio For Possible Mid-East Turmoil