Recently, the geopolitical situation has heated up again, and war concept stocks have become the market focus. I’ve also been paying attention to this sector lately, so I decided to organize my observations.

Besides the uncertainties brought by international conflicts, Japan has significantly increased its defense budget, and a bunch of Japanese retail investors are heavily investing in defense stocks through NISA accounts. This has directly boosted the overall industry’s attention. When tech stocks are not performing well, defense, energy, and mining stocks have become the three main drivers. At the beginning of the month, I allocated to a U.S. PPA ETF, mainly because the defense industry chain is too complex, so buying a basket is more convenient.

If we talk about individual stocks, the returns are indeed attractive, but the volatility is also high, so it depends on personal risk tolerance. War concept stocks cover a very broad range of industries, from AI, drones, aerospace to the potential future robotics industry. Here are a few directions I’m particularly interested in:

First is aerospace engines. GE’s aerospace division almost monopolizes the aircraft engine market, and aircraft maintenance is especially profitable, providing a stable cash flow. Then there are missile and fighter jet systems; Lockheed Martin mainly focuses on this, with the F-35 fighter jet as their flagship product. Raytheon is a major player in the missile field, with a very diverse product line.

Another noteworthy company is Kratos, which specializes in low-cost drones. This is an emerging sector with high volatility, representing a high-risk, high-reward opportunity.

Honestly, geopolitical instability has become the norm this year. My strategy is to hold gold, silver, and defense stocks to hedge risks. This combination tends to be relatively resilient during turbulent times, making it a fairly balanced portfolio. If you're interested, you can check out related market data and products on Gate.