At Least These Stocks Are Up…

I think the market action over the past week has been pretty definitive, but let’s just state the obvious upfront. 

The Trump administration’s economic policy is backfiring. 

Rather than pliantly succumb to Trump’s attempt at coercion, foreign trade partners are retaliating. America has made itself the focus of a global trade war that figures to drag everyone down.

Many of us saw this coming, of course. Analysts across the financial sector — myself included — have been warning about this for months.

But the past week’s market crash suddenly made it real for many others.

Now, there’s no point in simply bailing on the market. 

Nobody should panic here. 

We’ve been through plenty of other flash crashes and bear markets — from the dot-com bubble, to the Great Recession, to COVID. 

Every single one of those events proved — to use Jerome Powell’s favorite term — transient. 

In fact, they made for some of the best buying opportunities the market has ever seen. 

That’s a long-term view, though.

It’s easy to say, "Be greedy when others are fearful," like Warren Buffett would. It’s easy to say, “Buy the dip.” But that doesn’t make huge market declines any easier to stomach for investors watching their portfolios free-fall.  

In the short term, you need safety. 

You need to find the stocks that are, at the very least, falling at a slower rate than the market itself. And ideally, holding their own or yielding some form of income. 

One great place to find stocks like that is the defense sector. 

For example, RTX (NYSE: RTX) and Northrop Grumman (NYSE: NOC) are up 3% and 4%, respectively, year to date.

And others like L3Harris (NYSE: LHX) and General Dynamics (NYSE: GD) are down 2.5% and 4.25% — which is better than the S&P 500’s double-digit decline.

These returns are further buttressed by dividend yields that exceed 2% in most cases. 

Indeed, RTX stock currently yields 2.15%, while NOC kicks out 1.7%. LHX and GD both yield 2.4%.

Those yields will increase if these companies continue to see their share prices eroded by further market declines, as well.

Defense stocks like these would be doing even better if they didn’t get off to such a rocky start in January, too. 

That is, prior to the current market collapse, President Trump caused a mini-panic in the defense sector when he kicked off his term by suggesting he’d like to cut the defense budget in half, gave Elon Musk and DOGE the keys to the Pentagon, and called on the defense secretary to make major reductions. 

However, the continuing resolution passed by Congress in March included a $6 billion increase in defense spending — even as it cut non-defense funding by $13 billion. 

Additionally, Republican congressmen like Roger Wicker — the chairman of the Senate Armed Services Committee — are pushing for even higher defense budgets going forward. 

And that case was made a lot stronger by recent military operations in the Middle East targeting Iran and its proxy groups. 

Obviously, a war or military strike on Iran would be extremely bullish for defense stocks like the ones I’ve mentioned. But even if such a catastrophe is averted, increased tensions along with a massive increase in European defense spending should continue to prop defense contractors up for the foreseeable future.

So if you’re looking for a place to hide out and weather the market mayhem, I’d take a good hard look at defense stocks.

Fight on,

Jason Simpkins

Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…

In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor's page.

Be sure to visit our Angel Investment Research channel on YouTube and tune into Jason's podcasts.

Want to hear more from Jason? Sign up to receive emails directly from him ranging from market commentaries to opportunities that he has his eye on. 

@OCSimpkins on Twitter