Geopolitics and financial markets have always been intertwined. After 9/11, the defense sector was one of the best-performing sectors over the following decade. In the last couple of years, defense stocks have underperformed but this could change especially with recent catalysts. Therefore, investors should look to buy high-quality defense stocks like Lockheed Martin (NYSE:LMT), Northrop Grumman (NYSE:NOC), General Dynamics (NYSE:GD), and OSI Systems (NASDAQ:OSIS). .Over the last month, there’s been an increase in geopolitical tensions. The US has been pulling out of Afghanistan which has been a difficult and complicated affair even before the tragic terrorist attack at the airport. Some analysts fear that the country could once again become a safe haven for extremists.
In addition to this, there are signs of increasing Chinese aggression in terms of its provocations towards Taiwan and patrols around the Philippines and Japanese-controlled islands. On top of this, there are reports that North Korea has restarted its nuclear reactor in Yongpyong.
Geopolitics and financial markets have always been intertwined. After 9/11, the defense sector was one of the best-performing sectors over the following decade. In the last couple of years, defense stocks have underperformed but this could change especially with recent catalysts. Therefore, investors should look to buy high-quality defense stocks like Lockheed Martin (LMT), Northrop Grumman (NOC), General Dynamics (GD), and OSI Systems (OSIS).