Middle East Mayhem Means More Missiles? Bean's Take on Defense Stocks!

Uh Oh Trouble in the Sandbox!

Right so I saw this news you see about loud bangs and flashing lights in a far off place called the Middle East. Apparently grown ups are having a bit of a tiff. And wouldn't you know it some things called 'defense stocks' are going up! Like Teddy when I accidentally launched him with my catapult. Higher and higher! It seems the more they argue the more shiny new things they need to… well I’m not entirely sure. Point is more money for the boom boom brigade!

Is This the End? Or Just Tea Time?

Now a clever chap called Douglas Harned (sounds like a funny name!) said this could be a 'turning point'. Ooh sounds dramatic! But then he went on to say it's too early to tell. Typical grown up talk isn't it? Like when I try to fix the plumbing – could be a masterpiece could be a flood. You never really know do you? Perhaps a nice cup of tea is the answer to it all.

Shiny Things Go Up (Then Maybe Down?)

There's this thingy called 'iShares U.S. Aerospace and Defense ETF' (try saying that after a biscuit!). It's gone up almost 17% since May. That's like finding a whole pound coin down the back of the sofa! But… it hasn't gone up much lately. Like when I try to start my Mini – sometimes it goes sometimes it just makes a grumpy noise. Apparently some folks think things might calm down. I hope they do. Less boom booms more picnics!

Naughty Iran and Some Hesitation

Apparently Naughty Iran might have something to do with this whole kerfuffle. There is a risk that the perceived danger in the region increases again. 'We could see ongoing US involvement despite administration statements to the contrary or aggressive efforts to fill the vacuum by Russia or China. These outcomes could lead to prolonged instability and rising global defense spending. 'Much is left to play out here,' Harned wrote.

NATO to the Rescue! (Or Not?)

Now some other clever clogs at NATO are saying they might spend even MORE money on… stuff. Something about 3.5% of GDP on defence at the upcoming summit from 2% today which represents $150BB+/yr of incremental procurement of which historically has been 2/3rds to US products. Blimey! That's a lot of beans! Seems like everyone wants new toys.

Long Term Winner or Short Term Fling?

In conclusion one should consider looking at the long term as the defense stocks have been long term winners. 'Over the two and a half year period from the start of 2023 through June 20 2025 the three aerospace and defense ETFs showed greater cumulative price appreciation compared to a fund that replicates the S & P 500. The aerospace and defense stocks also outperformed the S & P 500 fund over 1 3 5 and 10 year periods.' So should I put my beans in these 'defense stocks'? Perhaps. But I think I’ll stick to what I know best: sandwiches and avoiding Mrs. Wicket.