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Invest in defense industry?

WildBillHimself

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With war in Europe, the Mid-east, and maybe the Pacific region, many countries are boosting their spending on defense. It would seem to be a good time to own shares in those companies that supply the goods and services that are in demand. Most of those companies are here in the USA. I'm looking at funds that hold a diversified mix of "defense and aerospace". Does anybody see a downside risk in the next few years? The only risk I can see is if our own government chooses to stop spending money on those wars. I don't mean this to be political, just an investment idea.
 
I'm not very knowledgeable on stocks but I'd say "yes". Look at the large amount of weapons given to Ukraine and Israel. If those systems are replaced, then the big defense contractors stand to make a lot.

Plus Lockheed Martin is back logged on both the F-16 & F-35 production, Northrop has the B-21 Raider coming online and Boeing is building the new F-15EX. General Dynamics potentially has the M1 Abrams replacement program too.

Just my opinion of course.....
 
There are at least eleven funds that focus on the defense industry. Some hold fewer than 30 companies and some hold more than 50. Several of them track some index or other. Most are concentrated in American companies but a few also hold stocks in friendly countries (UK, France, Germany, South Korea, etc.).
I'm going to pick one or two funds that are holding a large variety of companies and have good performance relative to their competitors.
Governments are the customers for defense contractors and governments will always spend lots of money even if the overall economy goes bad.
 
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