In the investment world, there is are always different types of investments for different types of investors. Some people are day traders, the most important aspect is volatile prices or some sort of pop. As long as the stock is moving either upwards or downwards, it is possible to profit from it. There are other companies where the main action is the quarterly report where it says it met expectations. These companies tend to be less newsworthy carrying about their business and overtime as long as expectations are met, will increase in value. Another case is special situations which are affected by the news cycle of the day, week or month.

In an article by Purvi Agarwal, Rashika Singh, and Johann M Cherian of Reuters, when President Trump decided to start the war in Iran, that lead to increase volatility which the day traders liked. It created special circumstances because for every action, not all companies benefit.

In a war, people generally look at defense stocks because many of the products are very useful in a war and depending on how long it lasts, new orders for more product should be forthcoming.

A lot of conflict premium was in the defense stocks valuations, said David Bianco, an Americas chief investment officer at German asset manager DWS. We saw gold and oil and defense rally, part of the reason was messages from the Trump administration. When Trump sent the armada to the Middle East, nobody knew anything, but they saw chances of conflict reasonably high.

Reuters reported in the weeks leading up to the war that the US was building up forces and preparing for a weeks-long operation if diplomacy failed.

In addition, President Trump asked for more money up to $1.5 trillion for the 2027 defense budget, up from $1 trillion in 2025.

The defense index has surged more than 150% between 2020 and 2025, leaving the sector at historically elevated valuations. The S&P 500 Aerospace and Defense sub-index trades at about 32 times 12-month forward earnings, well above the broader S&P 500’s multiple of 20 times, according to LSEG data.

Sameer Samana, head of global equities at Wells Fargo Investment Institute, said the conflict would need to last longer, or expand materially for estimates to move higher.

One of the good things for existing shareholders has been share buybacks, the Trump administration is pressuring the defense firms to prioritize production rather than share buybacks, raising questions about capital returns.

The sector’s medium-term outlook depends heavily on US budget decisions with key spending details expect by April 21, Bloomberg News reported.

Linking to dividend paying stocks, with every conflict there are some companies that benefit and others that do not, but the companies that benefited before the war started, not once the war started. Once the war started other companies that have operations in the Middle East have not benefited and likely lost money. If you invest on a news cycle, it is important to do your homework before the event happens, not while it is happening.

There are more questions than answers, till the next time – to raising questions.