Best of the Week
Most Popular
1. Crude Oil and Water: How Climate Change is Threatening our Two Most Precious Commodities - Richard_Mills
2.The Potential $54 Trillion Cost Of The Fed's Planned Interest Rate Increases - Dan_Amerman
3.Best Cash ISA Savings for Rising UK Interest Rates and High Inflation - March 2018 - Nadeem_Walayat
4.Fed Interest Hikes, US Dollar, and Gold - Zeal_LLC
5.What Happens Next after February’s Stock Market Selloff - Troy_Bombardia
6.The 'Beast from the East' UK Extreme Snow Weather - Sheffield Day 2 - N_Walayat
7.Currencies Will Be ‘Flushed Down the Toilet’ Triggering a ‘Mad Rush into Gold’ - MoneyMetals
8.Significant Decline In Stocks On The Cards! -Enda_Glynn
9.Land Rover Discovery Sport Extreme Driving "Beast from the East" Snow Weather Test - N_Walayat
10.SILVER Large Specualtors Net Short Position 15 Year Anniversary - Clive_Maund
Last 7 days
Bitcoin Price Trend Forecast, Paypal FUD Fake Cryptocurrency Warning - 17th Mar 18
Strong Earnings Growth is Bullish for Stocks - 17th Mar 18
The War on the Post Office - 17th Mar 18
GDX Gold Mining Stocks Fundamentals - 16th Mar 18
Nationalism, Not the Russians, got Trump Elected - 16th Mar 18
Has Bitcoin Bought It? - 16th Mar 18
Crude Oil Price – Who Wants the Triangle? - 16th Mar 18
PayPal Cease Trading Crypto Currency Bitcoin Warning Email Sophisticated Fake Scam? - 16th Mar 18
EUR/USD – Something Old, Something New and… Something Blue - 16th Mar 18
DasCoin: A 5-Minute Guide to How It Works - 15th Mar 18
Stock Market Downward Pressure Mounting - 15th Mar 18
The Stock Market Trend is Your Friend ’til the Very End - 15th Mar 18
6 Easy Ways to Get What Women Want, for Less! - 15th Mar 18
This Isn’t Your Grandfather’s (1960s) Inflation Scare - 15th Mar 18
Eye Opening Stock Market Index, Volatility, Charts and Predictions - 15th Mar 18
Gold Cup At Cheltenham – Gold Is For Winners, Not For Gamblers - 15th Mar 18
Upcoming Turnaround in Gold - 14th Mar 18
Will the Stock Market Make Another Correction this Year? - 14th Mar 18
4 Ways To Writing An Interesting Education Research Paper - 14th Mar 18
China Toward Sustainable Economic Growth - 14th Mar 18
Stock Market Direction Is No Longer Important - 14th Mar 18
Trade Tariffs Defeat Globalists and Return Prosperity - 14th Mar 18
Stock Market Crash is Underway and Cannot be Stopped! - 14th Mar 18
Are Energy Sector Stocks Bottoming? - 14th Mar 18
Nasdaq Stocks Soars to New Record High After Strong Job Reports - 14th Mar 18
Bitcoin BTCUSD Elliott Wave View Calling for Rally toward $15,000 - 13th Mar 18
Hungary’s Gold Repatriation Adds To Growing Protest Against US Dollar Hegemony - 13th Mar 18
Record Low Volatility in Precious Metals and What it Means - 13th Mar 18
Tips for Writing and Assembling the Classification Essay - 13th Mar 18
Gerald Celente "If Rates go up too High, the Economy goes Down, End of Story" - 13th Mar 18
Stock Market Selloff Showed Gold Can Reduce Portfolio Risk  - 13th Mar 18
Silver Does it Again! Severe Consequences - 12th Mar 18
Has the Stock Market Rally Run Out of Steam? - 12th Mar 18
S&P 500 at 2,800 Again, Stock Market Breakout or Fakeout? - 12th Mar 18
The No.1 Energy Stock To Buy Right Now - 12th Mar 18
What Happens Next When Stock Market Investor Sentiment is Neutral - 12th Mar 18
Economic Pressures To Driving Gold and Silver Prices Higher Long-Term - 12th Mar 18
Labour Sheffield City Councils Secret Plan to Fell 50% of Street Trees Exposed! - 12th Mar 18
Stock Market Uptrend Resuming? - 11th Mar 18
Bond Market Interest Rate Yields Are Rising Again… Stocks Are on Thin Ice - 11th Mar 18
Death of Europe's Greenest City, Police State Sheffield Labour Council to Fell 50% of Street Trees - 11th Mar 18
Do All Bull Stocks Markets Need to Have a Bearish Divergence? - 11th Mar 18
An Inflation Indicator to Watch, Part 3 - 11th Mar 18
Online Stock Trading Tips - Tips about Online Trading & Day Trading - 11th Mar 18
NDX makes a new high. What does that mean? - 10th Mar 18
Blue Chip Companies on Track for $800 billion Buyback Record in 2018 - 10th Mar 18
Cheap Gold Stocks Basing - 10th Mar 18
An Introduction to Online Forex Trading - 10th Mar 18

Market Oracle FREE Newsletter

Urgent Stock Market Message

US Military May Soon Deploy Millions Of Drones—Which Presents A Big Investment Opportunity

Politics / US Military Aug 04, 2017 - 12:26 PM GMT

By: John_Mauldin


BY PATRICK WATSON : 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 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.

Leaderless Swarms of Drones

Warfare is still about arming soldiers and sending them to face the enemy. That may not be the case much longer.

Drone aircraft were the first breakthrough. They enable pilots to control their planes remotely, from a safe place, firing missiles when they see an enemy. A big step, but the big drones still resemble conventional aircraft.

The new drones are getting much smaller—and that will change everything.

A few months ago, I heard the head of the Pentagon’s Strategic Capabilities Office Dr. Will Roper speaking about “drone swarms.”

He argued that large numbers of small, inexpensive, autonomous drones working together can accomplish many of the same missions as expensive aircraft and human pilots.

The key to Dr. Roper’s vision: Drone swarms have no leader an enemy can target.

They operate much like a swarm of ants or bees. No single bee knows how to build a hive, protect the queen, and produce honey. But collectively, they still make it happen, which is quite impressive.

A few months ago on 60 Minutes, Roper demonstrated some of his drones—and I bet the DoD has even better ones still under wraps. Some are small enough to hold in one hand.

That doesn’t mean the US government will stop buying fighter jets and armored vehicles. Wise generals don’t give up a capability that an enemy might have. However, the defense industry will expand and change.

Today, leading companies profit by making sophisticated, expensive weapons platforms in relatively small numbers. Drones will be a different business. They’re small, simple, inexpensive, and the Pentagon will need a lot of them—maybe millions.

Customizing drones for particular missions will require an ability to produce them quickly, as needed. Who knows, companies might even develop mobile drone factories that can deploy to a war zone and produce new swarms every day.

The Defense Renaissance

Of course, no one likes being swarmed, and there are already commercial anti-drone technologies. For example, paparazzi photographers using drones to spy on celebrities now meet everything from net-carrying counter-drones to trained falcons.

I expect we’ll see years of rapid development for both military and civilian uses. A military reconnaissance drone swarm could also quickly search large areas for lost children or shipwreck survivors.

To me, that’s the really exciting part. Some of today’s ubiquitous technology originated in military applications. I wish we could develop them for peaceful reasons, but at least we have them.

Defense stocks never go out of style, and they’re about to enter a period of rapid innovation. I think there will be more great opportunities in this sector. I’m keeping my eyes open and I suggest you do too.

Subscribe to Connecting the Dots—and Get a Glimpse of the Future

We live in an era of rapid change… and only those who see and understand the shifting market, economic, and political trends can make wise investment decisions. Macroeconomic forecaster Patrick Watson spots the trends and spells what they mean every week in the free e-letter, Connecting the Dots. Subscribe now for his seasoned insight into the surprising forces driving global markets.

John Mauldin Archive

© 2005-2018 - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.

Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules