If you were to ask me what the most inefficient US market sector is, I would probably say, defense.
Now, that’s something no one likes to hear. How come the one sector the US government spends the most money on – the FY 2018 defense budget is $824.7 billion, more than that of the next nine countries combined – is the most inefficient?
Here’s what most people don’t understand: It’s inefficient by design.
Nobody wants war, yet governments are obliged to spend vast sums getting ready to fight it. They’re usually not very thrifty either.
For investors, that’s actually a perfect combination because inefficiency, in this case, spells opportunity. And right now is an especially good time to get your feet wet in defense spending.
Technology is changing the very nature of warfare. A lot of expensive equipment will get replaced in the next few years… and what replaces it may surprise you.
This post was published at Mauldin Economics By Patrick Watson . August 1, 2017.
Follow on Twitter
Recent Comments