![\"EMAP](\"https:\/\/www.newsbeep.com\/uk\/wp-content\/uploads\/2026\/03\/EMAP-Ben-Kumar-Sketch-Feb-2024.jpg\")
Ben Kumar \u2013 Illustration by Dan Murrell<\/p>\nA year ago, I was writing here about investing in defence stocks when war breaks out. And I said that, when it comes to conflict, there are always two investor feelings.<\/p>\n
Ben Kumar \u2013 Illustration by Dan Murrell<\/p>\n
The first is fear for portfolios: \u201cHow much money have I lost?\u201d<\/p>\n
Then, hot on the heels, slightly hesitantly and slightly awkwardly: \u201cSooooo\u2026 is there any money to be made?\u201d<\/p>\n
For most of the last 12 months, I\u2019d have bet good money that this piece, in early 2026, would be about artificial intelligence.<\/p>\n
But here we are again. Planes in the air, missiles being launched, explosions being televised. And it\u2019s the same two questions.<\/p>\n
The answer to the first remains the same. Don\u2019t panic.<\/p>\n
The second is worth thinking about in light of the Iran\u2013Israel\u2013US conflict now dominating headlines.<\/p>\n
The lesson from history is that the side with the deepest industrial base tends to win a shooting war<\/p>\n
Most of the recent investing focus has, understandably, been on oil. And if you\u2019re an oil trader, the daily swings of more than 10% have certainly given you the opportunity to make \u2014 or lose \u2014 a lot of money. For longer-term investors though, I\u2019m not sure direct commodity markets are a particularly friendly place.<\/p>\n
Instead, let\u2019s talk about defence companies. The darlings of the market in 2024 and 2025. I suggested last year that the momentum might not be spent. Does the case still hold?<\/p>\n
Last year, I argued that defence stocks don\u2019t rise because there\u2019s \u201cmore fighting\u201d, but because governments make long-term investments. The lesson from history is that the side with the deepest industrial base tends to win a shooting war.<\/p>\n
In the 15th and 16th centuries, Venice dominated the Mediterranean not because it had the best ships or sailors, but because it built the best system.<\/p>\n
The winners are not the loudest weapons, but the companies embedded deep in supply chains<\/p>\n
The Venetian Arsenal was the largest industrial complex in Europe prior to the Industrial Revolution. At its peak, it could assemble and equip a fully functioning warship in a single day, while rival states took months. The Venetian government spent around 10% of GDP every year keeping it going.<\/p>\n
The power wasn\u2019t the ship. It was the industrial base behind it.<\/p>\n
Modern defence spending works the same way. The winners are not the loudest weapons, but the companies embedded deep in supply chains \u2014 munitions, sensors, maintenance, logistics. The unglamorous plumbing of security.<\/p>\n
And yet, for decades, most Western countries let defence spending drift down the priority list. Old equipment. No replacements. Fewer soldiers. The industrial machine rusted.<\/p>\n
That\u2019s changing now. Defence companies are growing not because there\u2019s more conflict, but because conflict has reignited investment in the supply chain.<\/p>\n