In today’s Exponential Investor

  • Hawaiian alerts
  • Two stocks that love war
  • Make sure your portfolio is fighting too

I was shocked this week to hear of a crisis that unfolded in Hawaii in 2018.

The shocking part was that somehow, I’d completely missed it. Yet it is one of the most intriguing (and bizarre) stories I’ve heard of in recent times.

The story goes…

On 13 January 2018 an emergency text message broadcast was sent to everyone  on the island of Hawaii.

It read,

Emergency Alert


This sent residents into a blind state of panic, as you would expect.

The only problem… it was a drill.

Thinking the unthinkable

The emergency broadcast was result of human error and poor checks on the processes of sending out actual emergency alerts.

But it took almost 40 minutes for the correction to be sent out.

That meant 40 minutes of sheer terror for residents of Hawaii.

I bring this up because I only learnt of this event this week. How did we miss it? I don’t know, it didn’t really seem to get much coverage at the time. I guess no one want’s to really advertise something so horrible going so wrong.

Why I bring it up today is because it seems pertinent to think about what you’d do if sometime in the near future an emergency alert hit your phone from the government telling you a missile strike was imminent and to seek shelter.

Far-fetched as it may seem, the mainstream media might have you believe that at any moment such an attack is possible. The idea is that a hypersonic ballistic missile strike from Russia could be hurtling towards British soil.

If that were the case, all bets would be off. It wouldn’t matter what assets you owned, or what investment you’d made: the only thing you’d worry about would be the safety of your family.

Of course a missile attack on the UK is highly unlikely. So, the truth is that there’s not really any need to worry about such an event. But it does give you some perspective. While your investments and financial future are very important, you should make sure to make the most of your time and enjoy things in life too.

But also, seeing as a missile strike is unlikely but still possible in the current geopolitical environment what can we make of the situation that rapidly changes every day?

Well, the other reason that a missile strike on the UK would be unlikely is because of the defences that are in place here and over the Channel in continental Europe. The way to stop an attack is to make sure you’ve got the bigger and better guns.

When there is war, the smart thing to do is to make sure you’ve got your lick of “war stocks” in your portfolio.

War = weapons = weapon stocks

Take a look at these two stocks. I’m not going to tell you what they do, I want you to guess solely based on their chart… and the theme of today’s Exponential Investor

Source: Koyfin

What you’ll see is a common point of explosive action on both these stocks.

Right around the time that Russia decided to invade the Ukraine.

OK… you’ve either guessed what they do, or you know that both BAE Systems (LSE:BAE) and Hensoldt AG (DB:HAG) are defence companies.

BAE Systems is one of the largest defence companies in the UK and Hendsolt is one of the largest in Germany.

Year to date, BAE is up around 33% and Hendsolt has more than doubled.

Those are handy returns if you had had any foresight of a major military event taking place this year.

Of course, it’s unlikely you did. Not many people saw it coming when it did. But, when it comes to war, you can never really predict when it will kick off.

However you can always predict that war will happen. In fact war is one of the staple forms of activity that governments undertake. Without a war somewhere in the world, some governments may struggle to find their relevance in the world.

That doesn’t work for their power balance very well, so it’s in their own interest to make sure they’re always fighting some war, somewhere in the world.

A constant throughout history and into the future

This all means that war is a constant in our world and unfortunately always likely will be.

In most cases, a government is always likely to be joining a war, starting a war or defending from a war. That might be a physical war that we’re watching happen now or a digital war that is always in play.

There’s little you can do about any of that. But you can make sure that if we’re always at war, your portfolio is appropriately balanced when conflict kicks off.

While a lot of stocks take a pasting when conflict begins, I’ve just shown you two examples where that’s absolutely not the case.

BAE and Hensoldt are just two ways that you can play perpetual war. There are many others on the London exchanges, as well as the American and European exchanges too. The critical part is that you should expect war will continue to be a constant and look to the best “war stocks” you can.

That way you can ensure when war kicks off your portfolio won’t get “nuked”.

Until next time…

Sam Volkering
Editor, Exponential Investor