Remarkably, the Trump administration has not yet started a war despite multiple geopolitical flash points. On top of the ongoing trade war with China, the U.S. must contend with a number of tense situations. Therefore, defense stocks are particularly relevant now.
Initially, this may sound like a strange statement to make. After all, even the most bullish investors will concede that this market rally has overextended itself. Thus, we should welcome a correction to work out some of the excess optimism. Under this environment, the best stocks to buy feature protective elements, such as strong track records of dividend payouts.
Obviously, defense stocks primarily take the term protection quite literally. But even though President Trump — who is typically aggressive with his word choice and blunt with his delivery — is uncharacteristically quiet about certain geopolitical situations, don’t mistake that for an immediately peaceful resolution. We have many problems that will require a big stick, and perhaps the capacity to wield it.
For instance, the situation in Iran may soon reach a fever-pitch. Trump opted to hit the country with economic sanctions in response to Iran downing an American military drone.
But in response, Iranian President Rouhani called the White House “mentally handicapped.” Outraged, Trump threatened to obliterate parts of Iran if they attacked any more American assets. That is just begging for an uptick in defense stocks. more