In spite of growing evidence that more countries in the global community are embracing democratic reforms, Russia's recent incursion into Georgia has reminded many in the investment community that the world is still a dangerous place.

Whether Moscow's move represents the dawn of a new cold war, as some have suggested, or merely a regional power play, it seems clear that the conflict in South Ossetia was a significant marginal change for international relations and the global financial markets, with ramifications for portfolio managers of all styles and asset classes. A more bellicose Russia and the growing political and military power of the world's "petro-states" have important implications for investors. First, energy will be seen even more as a national security issue, providing a boost for the alternative energy movement and the McCain campaign for US president.

Events in the Caucasus have broadened concerns about the growing power of petro-states beyond national security wonks to the man on the street in the US who, until recently, viewed the high price of crude through the practical prism of his discretionary spending. Greater hostilities between the west and oil rich nations will only serve to harden the political will to make broad-based investments in alternative energy sources.