War $$$ - Have Defense Contractors Benefited From Afghanistan?

This email is one I was hesitant to write due to how political it is in nature.

After almost scrapping this entire article I realized that I created the Always Invested newsletter to share my in-depth thoughts on topics just like this.

With that said we are going to be talking about the war in Afghanistan and how it has affected defense contractors like Lockheed Martin, Raytheon, and Boeing.

My market moves:

The last week I have been adding to QQQJ in my Roth IRA. I took up a challenge with @disneybeachlv to add shares of QQQJ everyday till the end of August.

QQQJ is the Nasdaq next gen 100 ETF that tracks the next 100 stocks of tomorrow. It’s a growth focused ETF that I plan on holding for the next 20+ years.

Note: If this email is appearing in your spam you can fix that by dragging it to your main inbox.

“To make war you need three things: one, money; two, money; and three, money.” - Megan Whalen Turner

First off, I wanted to share my thanks to those who have served and also the shared grief for those who might have friends or family still stuck in Afghanistan.

Over the last two weeks the withdrawal from Afghanistan has been an extremely hot topic around the world. Shocking images and videos of the evacuation have been circuiting across social media platforms as the Taliban have retaken the country in a matter of days. It really makes one appreciate what you have after seeing the lengths the Afghan people are willing to go to to escape the country.

The withdrawal operation is now the largest humanitarian airlift in history, but has resulted in the lives of over a hundred Afghans and thirteen U.S. Service Members.

God bless those who have made the ultimate sacrifice.

Big Business

Reading through press releases from the week I came across a number of articles addressing how defense contractors have been affected by this 20-year war.

One article by The Intercept stated the following.

• If you purchased $10,000 of stock evenly divided among America’s top five defense contractors on September 18, 2001 — the day President George W. Bush signed the Authorization for Use of Military Force in response to the 9/11 terrorist attacks — and faithfully reinvested all dividends, it would now be worth $97,295.This is a far greater return than was available in the overall stock market over the same period. $10,000 invested in an S&P 500 index fund on September 18, 2001, would now be worth $61,613.That is, defense stocks outperformed the stock market overall by 58 percent during the Afghanistan War.

This was an interesting read that led me to reading more about this topic.

After further research I came across another article by Fred Kaplan titled, The Military-Industrial Complex Will Be Just Fine Without Afghanistan, that actually addressed how the article by The Intercept took some things out of context.

His analysis looked into the five largest defense contractors and how their growth was influenced by the war in Afghanistan.

Breakdown Of His Findings

Kaplan’s article highlights the defense contracts that have played a major part in the success of these companies. Interestingly enough, a large percentage of the contracts awarded are not a result of Afghanistan.

Here is a summary of the main contracts for each company.

• Boeing ($BA) - Commercial airliners, B-1 bomber, C-17 cargo jet, V-22, F-15. F-18.

• Raytheon ($RTX) - Nuclear cruise missiles, defense systems, satellite projects.

• Lockheed Martin ($LMT) - Blackhawk helicopters, multiple-launch rocket systems, F-35 stealth fighter.

• Northrop Grumman ($NOC) - Intercontinental ballistic missiles, B-21 bomber.

• General Dynamics ($GD) - LAV-25, nuclear submarines, burke-class destroyer ships.

According to Kaplan, the Blackhawk helicopter and LAV-25 were money makers, but neither were “big buck” contracts that heavily affected the balance sheet of these companies.

He also points out that the $754 billion defense budget focused on the development of new “fighter jets, bombers, missiles, ships, and submarines” is mostly a result of new tensions with Russia and China.

Conclusion

Disclaimer, I am not a military expert.

My take on Afghanistan from the articles I read is that while defense contractors have definitely made money from the war in Afghanistan, it’s not a main driver of their funding.

I don’t think we’ll see any of these companies be terribly hurt by the U.S. ending this 20 year fight-on-terror.

In order to remain the most powerful military in the world the U.S. must continue to innovate and expand their armed forces. As we all know that takes money, and the business that drive this innovation will continue to be awarded billions of dollars in defense contracts.

As seen by events in the last year or so the potential of companies can change within a matter of days.

That’s why I choose to have the majority of my money invested in ETFs as they allow me to easily invest into hundreds of companies.

For five people reading this email I’m offering 25% off “Simply Invest With ETFs.”

Use the code “25off” at checkout to claim this discount, don’t wait.

NFT takeover here recently.

Thanks for reading, if you have any questions, comments, suggestions, etc. about the email send me a DM on twitter. See you next week!