Defense Stocks: A Reluctant Rally

by

January. Honestly, the sheer optimism of January. One expects grey skies and existential dread, not soaring stock prices. But apparently, the defense sector is having a moment. The S&P Aerospace and Defense Select index is up, like, 11% already. Eleven! It feels… irresponsible. Though, of course, I’m watching it very closely. For purely analytical reasons, naturally.

The SPDR S&P Aerospace & Defense ETF (XAR) is doing even better, up over 10.5%. Which, when you compare it to the S&P 500’s paltry 1%, feels… significant. I mean, it’s not like I want to profit from global instability, but… well, one has bills to pay. And a slightly alarming fondness for organic avocados.

Three stocks in particular are doing the rounds: Lockheed Martin (up 26%!), Northrop Grumman (20%), and Huntington Ingalls Industries (24%). It’s all a bit… much. Like everyone suddenly decided that impending doom was a good investment strategy. Which, let’s be honest, isn’t entirely irrational.

Units of Avocados Consumed While Analyzing Charts: 3. Hours Spent Worrying About the Moral Implications of Profiting from Conflict: 7. Number of Times I’ve Told Myself to Diversify: 15.

The Trump Factor (and It’s Not What You Think)

Everyone’s talking about Trump demanding NATO members spend 5% of GDP on defense (3.5% on actual defense, the rest on infrastructure – clever, really). Germany, bless their efficient little hearts, is apparently planning to double their spending within five years. It’s all very… ambitious. And, let’s be honest, predictable. It’s not like anyone genuinely expected a sudden outbreak of global peace. The forecast is $2.6 trillion this year, an 8.1% increase. Honestly, it’s almost… boring. The sheer inevitability of it all.

Then there’s the Golden Dome missile defense shield and the Golden Fleet plan. Because, naturally, we need more things that go boom. Lockheed Martin, Northrop Grumman, and Huntington Ingalls are, unsurprisingly, benefiting. It’s all rather… cyclical. Like history repeating itself, only with slightly more advanced weaponry.

And the Trump-class battleships. Oh, the Trump-class battleships. Apparently, “everyone who’s anyone in defense” should profit. Which, if you think about it, is a rather terrifying statement. It’s not about national security, is it? It’s about… opportunity.

Aggression, Arms Sales, and the Inevitable

Trump’s aggressive stance on Greenland (seriously?) has rattled the North Atlantic alliance. Which, predictably, has led to increased investment in defense capabilities. It’s like poking a bear with a very large stick. The Middle East, meanwhile, is becoming increasingly… volatile. Which, let’s be honest, is hardly news. Countries are spending heavily on defense, because, well, what else are they going to do? Pretend everything is fine?

The recent arms sales to Israel and Saudi Arabia (a combined $15.67 billion) are… substantial. And, unsurprisingly, benefiting U.S. defense firms. It’s a dangerous world, yes. But it’s also a remarkably predictable one. Governments arm themselves. Companies profit. And I, reluctantly, consider increasing my position in XAR. It’s not about wanting to profit from conflict, you understand. It’s about… being a responsible investor.

Hours Spent Rationalizing Investment Decisions: 11. Number of Times I’ve Considered Becoming a Monk: 8. Amount of Guilt Experienced: Immeasurable.

Read More

2026-02-06 22:02