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If you haven’t been paying attention or live under a rock then you probably noticed how the first week of 2020 has significantly increases world wide geopolitical tensions and the increase of a chance of World War 3 occurring in 2020. With Iran responding to the US by sending multiple ballistic missiles on US bases located in Iraq there is a strong chance that US will respond with more military action.
To be clear, war is not a positive event and the total cost of human lives and destruction make it net negative event for humanity and the entire globe. Generations of humans will be affected by a large scale war and years of economic, technological, and societal progress get impacted. Furthermore, with the state of military technology, a war would have tremendous impact on the climate and environment which would directly reduce the quality of the lifestyle of future generations.
Now, for the pragmatic investors who want to protect their investments and finances so not to be impacted financially, there are some plays you could make to ensure you are protected in the event of a large scale war.
Here is a list of types of stocks or equities that would likely perform well, in no particular order.
Stocks to Consider in Case of World War 3 Starts in 2020
Due to new innovations in drones, it would be expected that use of drones within a military settings would be very high. There is a great post on Sure Dividend about the best drone stocks to take a look at. Here is the link to that article: https://www.suredividend.com/drone-stocks/
This is of course obvious. War is fuelled by no other than oil. Many have already been buying into oil stocks as soon as the news came out that US had killed the Iranian military head. This could act as a hedge in a sense to rising gas prices. Here is good article highlighting 6 oil stocks to watch out for https://oilprice.com/Energy/Energy-General/Six-Of-The-Hottest-Oil-Stocks-For-2020.html. Warren Buffett also has a stake in Suncor, a Canadian oil company.
With increased volatility and instability in the world, gold and gold stocks typically would perform well in these environments as a safe haven in case market volatility continues to rise. Buying into a gold ETF could work out in your favour. It has been advocated by legendary investors like Ray Dalio.
Military Equipment Manufacturing Stocks
With war, naturally their is an increased in weaponry, ammunition, jets, tanks, and other related military equipment. I won’t go into detail as to which stocks and companies their are in this bucket but a quick google search will show you who the leaders are in each respective category.
This one might be too late, but prior to the escalation of events many people were buying into volatility plays. These stocks basically increase whenever their is volatility in the market or people are expecting a drop in the S&P or Dow Jones. The $VIX is a popular one for US traders while for Canadians they could play with $HUV.TO. These are meant to be traded quickly on not held on to. For what it’s worth, a prominent $VIX trader named 50 cent bought lots of calls in late December. These calls were options contracts where they were banking on a significant increase in the $VIX. I am not advising trading these, but they could be something to monitor.
Again, I am not hoping for a war all. I am completely against such an event from occurring as mentioned above.