Why you can’t ignore defense stocks
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Welcome to Trader Talk where we dish out the latest Wall Street buzz to keep your portfolio sizzling. I’m Kenny Pilcurry coming to you live from the Yahoo Finance headquarters in the heart of New York City, a global hub where deals are made, fortunes are built, and the next market move is always just around the corner.Next, I’m going to share my big take on how politics impacts the markets. Sit down with Warrior Money co-host Dan Koontz to discuss defense stocks and reveal my favorite Sicilian style linguini with clams. It is delicious. Now let’s jump into my big tape. Let’s be honest. Every investor loves to say, I don’t care about politics, I just follow the numbers. That’s a fantasy. Politics moves.Regulation, taxes, tariffs, foreign policy, even a straight tweet can trigger rallies, crashes, or entire sector rotations. If you’re not paying attention to what’s happening in Washington, Brussels, or Beijing, you’re driving with your eyes closed. But here’s the trap. Obsessing over every headline, every poll, and every political hot take will ruin you. The market overreact.to the noise, then it corrects. Laws take months or years to pass, and half of what’s promised on the campaign trail never really gets implemented. Traders who jump at every new development get chopped up, whipsa by sentiment instead of capturing the real opportunity. Savvy investors do it differently. They tune out the noise and they tune into the policy. They watch for changes.With real lasting impact. Tax reforms, major spending bills, trade deals, and regulatory shifts. They keep they keep a close eye on sectors likely to be winners or losers and position themselves from what markets expect, not what’s trending. Bottom line, you can’t afford to ignore the politics, and you can’t afford to become a political junkie either.Use policy as your weather forecast, not your GPS. Stay alert, be ready to adjust, but don’t let the headlines make your decisions. The winners are the ones who filter out the static and act on what matters.Joining us today is Dan Kuntz, who’s the co-host of Warrior Money here at Yahoo Finance and a sharp voice on the intersection of national security and investing. With deep ties to the military community and a firm grasp of defense strategy, Dan brings unique insight into how geopolitics shifts, government spending, and global tensions shape the opportunities in the defense sector. Please join me.Welcoming Dan Coons to the show. Dan, it is a pleasure. Thank you for your service to the country. I understand it was 12 years 14 years ago today. Well,
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14 years ago today, 12 years in total service. I was in total service. Ford, Oklahoma for basic training,
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and you were in law school when you decided to join the army, yeah,
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butI was shaped by 9/11 as I know you were, and I wanted to serve from, from the youngest age I could remember because of that day.
3:00 spk_0
You were younger than I was when 9/11 happened.
3:02 spk_1
Yeah,
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they didn’t want me. Yeah, so they didn’t want me to, but, uh, but thank you for your service. I appreciate it. Where you serve?Did you serve overseas?
3:11 spk_1
I did not. I did not. I was mostly all US based. Uh, there’s some interesting work that I did in, uh, Fort Bragg. I can call it now Fort Bragg. Fort Bragg during in the Ukraine andAfghanistan.
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I think they actually renamed it Fort Bragg.
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Fort Bragg now it was Fort Laberty Fort Bragg again, but yeah.So no, most of my, all my work was state side, but we’re doing some work
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overs. Well, thank you very much. So look, let’s talk about first of all, we can talk about kind of the whole what’s going on in the world in terms of, in terms of the geopolitics and, and, and your view. Let me get your view on, on.On ultimately what happened in the Middle East in terms of uh the decisions that we made in action. I thought it was the right decision because I think somebody had to bring it to anend.
3:52 spk_1
I totally agree. I, I love your, you have to pay attention to what happens in Brussels, Beijing and Washington. You also have to care about what happens in Tehran or in Moscow or any of these places, right? And so here’s the deal, 1979, right? That’s when this new Iranian regime comes into power.
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Over I was, I was, I was a senior in college in 1970. I was 18 years old when that happened, so50 years,
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45, how however many years and, um, they’re, they’re a regional nuisance. They’re, they’ve been a problem the whole time. They’ve created.Uh, unrest and problems for everybody, for everybody for such a longtime,
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and their neighbors right there, right around
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them. And the worst part is that they’re sucking all of our resources away from us. Everyone is low, low conflicts, nuisance wars that we have to get into or even or issues that we have to deal with. At some point in time, President Trump stood up and said, hey, listen, like, enough’s enough.
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And, and he didn’t just say it. He’d said it all during the campaign.He’s been saying it all along, so no one can say he stood up and said, well, you had lost his mind. No, he 2 years he gave them basically.
4:55 spk_1
Yeah, I went on record actually right and say that I totally agree with his, his approach there. There’s another issue which is should the president have to ask Congress for permission to do it. That’s a whole other issue, right? But the reality is, like, come on now, like the guy they’ve been paying the ass for so long. It was enough is enough time time,
5:12 spk_0
right? And look, and I think.I think part of his part of his trip to the Middle East, you know, prior to the wars, I think not only warning but I think he actually, I think he actually got support from the Middle East. While they won’t say it out loud, I think behind the scenes they’re all clapping their hands because they didn’t want to deal with it anymore either. You know,
5:29 spk_1
the, the world wants, the world wants what we have. They want capitalism. They want an economy that works. They want modernity. They don’t want to go back to all those.Issues they want what the what we have and what they have. So it’s only a matter of time.
5:42 spk_0
And I think, OK, so we can get off that subject. I just think that, you know, as you, as you moved into it, we saw what happened to the defense sector this year and I mean defense sector, not defensive names. I’m talking about aerospace and defense, uh, yeah, Lockheed, Raytheon, General Dynamics, Northrop Crumman, and in my note actually the I think the day after on the Monday after we after.They dropped the bombs. I actually highlighted all the American defense companies, Lockheed Martin, all the roles that they played in terms of either the bombs or the planes that carried them or the or the or the or the uh uh the ship that launched them from, uh, from the sea, right? The Patriot missiles, right, the defenses and how they all played a role in how those stocks have actually been been performing. But in fact, I think the defense sector is the the sector you like.
6:27 spk_1
Yes, I actually call it the national security sector, but yeah, I get you. I get you. I got you I got you, because we’re, we’re evolving from a defense sector to a national security sector. You have to be dual use. It isn’t just a matter of like, let’s do the missiles and bombs. You’ve got to also do the infrastructure behind it, right?
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And I think,you know, and I, and I, and, and so yes, uh, that you have to do the infrastructure behind it, and I think that’s all very important, but I also think.In terms of investors that they have to have exposure to that sector 100% right is that they have to have whether you, whether you’re a hawk or a dove, the fact is, I think if you want a part of a well-balanced portfolio, you have to consider, uh, national security, quite honestly, I think it’s global security.
7:09 spk_1
Yeah, national security is economic security. I mean, at the end of the day they feed one another, right? So our, our navy.the petroleum, it patrols shipping lines. It shows all those things like it’s national security, it’s economicsecurity.
7:20 spk_0
So talk about today’s modern warfare versus maybe what it was when, you know, I was much younger. So the growing role of, of AI drones and and and kind of the cyber world in the defense in the defense.
7:35 spk_1
Yeah, my favorite story is to say like the Civil War was when it was won byrifle. Then World War II was won by mass production. This, this age that we’re going into right now is AI cyber in space. That is the world that we’re moving into.
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And that’s going to be the next kind of frontierfor,
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I mean, you don’t want to be fighting the war from the, you don’t want to be fighting the last year’s war. That’s what happened in Vietnam. That’s what happened in Civil War. You don’t want to be like fighting the last generation war, right? This, this war, the next one that we’re preparing for, you can talk about that in the future, but like,The one that’s being prepared for is an existential problem versus a near peer adversary. That’s what that’s what we’re preparing for. It’s a space war. It’s an AI war and it’s an infrastructure war. And then the underpinning of all that is energy. So it is a full, a full nonstop issue that you have to have energy to support these these initiatives,
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right? So, so let me.Question because when you look at the way drones have played a role in, in the Mideast conflict, not just, you know, Iran and Ukraine and Ukraine, right, how that’s played a role and how they’ve used both sides have used drones to really change kind of the face of the way warfare happens.
8:37 spk_1
Yeah, totally. So, uh, I was in a skiff in Fort Bragg, and we were talking about what shit, what’s happening in Ukraine, what’s, what’s going on in this issue set right here. And so what, what we’ve seen is recycle times within 2 weeks now, and we’ve seen very expensive drones being replaced by much cheaper drones that have an attrition factor behind it, but they’re, they’re flash to bang, their ability to get something out in the field.Has completely broken the expectations of the market. It’s going from $250,000 drones to $10,000 drones. They don’t care what happens to it, and then they go and they blow them up. It’s exactlywhat happens.
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And then, and so I think the other thing that’s amazing too is when you, when you look at either the way the Israelis did it with the with the pagers that blew up or or the way the Ukrainians did it, right, um.I, I, I think it, I think everybody woke up to kind of what this new face of, of conflict could look like.
9:29 spk_1
The amountof time that they had to prepare and seed for that to happen is just unbelievable it’s unfathomable how much time they had to put into that. They had to trace networks, they had to keep their, that had to have been a decades long, a decades long thing, and it’s just they were waiting for the right time. And what strikes, what’s the worst thing you can strike somebody? Their confidence, right.If you can’t be confident about what you’re about to do because your pants are about to blow up, that’s a really bad day. That’s a really, reallybad day.
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That’s a really bad day. But I gotta tell you, I thought just the, the way it played out, the way that the, the way that Ukraine did it, the way that the, that the Israelis did it, when you think about the, the amount of time and the amount of and the amount of intelligence that they have put in to create that, to create that opportunity. It’s amazing.
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It’s unbelievable. It’s unbelievable. It’s also ingenious.
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So talk about companies leading that space separate from Lockheed Martin and Raytheon, are there other companies that we should be looking at? Yeah,
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we’re in, we’re in a totally different transformation right now, right? There’s the historical legacy World War II group, and now we’re moving towards the future and Pallanter And is a private company, but there’s a lot of conversation about what they’re about todo.
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Hold on one second because we’re gonna stop for a quick break and we’re gonna come right back.All right, so let’s talk about Andre because that is everyone wants a piece of Andro, but it’s hard to get it because it’s a private company, yeah,
10:56 spk_1
yeah, so, um.You can get to it though. There’s there’s access to it. You can get to it. You can get to SpaceX as well. You can get to and you can also get to open AI and you get to XAI like all these companies are creating the new infrastructure of where this is all going, which is all in artificial intelligence. I also like some of the smaller tickers. I like some of the, probably not what you probably not what you normally talk about, but I like some of the underlying tickers, the ESP 10, TSSI. They’re creating.Foundational data set integrations and data center integrations.
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Are they all on NASAQ?
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Is it? Well, they’re
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onthe New York Stocks. Really? I have to look them up because those are names I don’t know.
11:36 spk_1
Yeah, please do. So I, I have a background in, in smaller stage, small microcap companies, and I really like them for where they’re positioning themselves for this next future. And so what,
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and so, so talk about their role. What do those
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companies do? They’re the infrastructure of artificial intelligence. They’re, they’re the component, the components of the things that have to happen to enable.AI, right? So they’re the energy providers, they’re the data center integration companies, they’re the server companies. They’re really the companies that are creating like the, I call it the the infrastructure of AI, but the foundational elements are required for it, right?
12:08 spk_0
You know what I think is also amazing is when you is when you look at the difference between the two technologies. So for instance, the Israelis, you know, could shoot a missile and hit you between the eyeballs and, and the Iranians, you know, shoot a missile that could land anywhere.You know, all around you, it doesn’t really know where it’s gonna land, but the Israelis could send it right and hit you between the eyeballs. I thought it was amazing, and I think that’s just gonna be part of where this technology takes us is the specificity in, in, in, in launching, launching.
12:37 spk_1
I have a I have a lot of conversations with a lot of friends of mine. I live outside of Philadelphia. They’re like, hey, how are we worried about this? So they come to me like, like last weekend, I got it because it was Saturday night when that yeah, I was at a wedding and I got a, I had a baseball game Sunday morning and my buddies were like.Yeah, well, how do I think about this? I’m like, it’s going to be OK. And the reason it’s going to be OK is that the Iranian response, they didn’t have enough resources to respond at scale, right? They’re a regional nuisance. What we’re what the US is preparing for and what we have at our disposal is the largest and best economy and national security apparatus in the world. So our ability to project power anywhere in the world is pretty unbelievable unbelievable.
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And I actually think that thatI, I, I think the world stood up and took notice.Of the fact that we did what we did, we didn’t, we, we didn’t blow up cities. We just went in there. We had a mission to do it. We did it. And so I think the world took a step back.
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I think thatthe Afghanistan evacuation in Kandahar, we had to step up and do something that demonstrate our capacity. That was a disaster. I agree. Yeah, I agree. We, we had to step up and show the world that we’re gonna lead and that we’re going to protect our people, right? And we’re protect others, right? And that, that was just, that was a really bad day for a lot of people, a lot of great.Americans served there for a really long time. That was a bad day
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in Afghanistan. Yeah, that was a badday,
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but it sends a signal. It sends a signal to the rest of the world and that cascades
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100%. But I actually think that the, I actually think that the response from countries around the world was much more positive than negative. I think you had, you know, Venezuela and, and Honduras, you know, you know, standing up going, no, no, no, I think the rest of the world stood up and said, you know what, somebody had to ultimately do enough’s enough, enough’senough.My,
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yeah,
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so let’s talk about, OK, so you got those small companies that, that you’re looking at, but are you, are you, do you continue to look at companies like Lockheed
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Mart always. I always, I always come back into my compounders like your Lockheeds and Raytheons,
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there’s big names inthe,
14:30 spk_1
yeah, you get your volatility in this I get my volunteer in the private and small cap space, right? That’s where I go. I know I can get some disproportionate returns there. I’m also a VC in two different national security and use firms, so you take yourwinnings out of there and then you put them in your, your bellwethers like your Locky’s, your Raytheons. I like Pallant here for a very long time for a lot of reasons. So you just keep yourself in there and you take your wins, then you kind of diversify those as well. Um, we had Cabeli on, uh, on Warrior Money about two months ago. They have an airspace and defense ETF that’s worth looking at as well.
15:04 spk_0
Gabelli Gabelli, yeah Gabelli, right. So talk about.Retail investors, um, in their approach to defense, right? How do they balance their values, right, uh, uh, with, with kind of where we are values where we are. Let’s say, you know, I don’t wanna, I don’t want to invest in, you know, companies that make guns.
15:24 spk_1
I don’t, I don’t really want to invest in companies that make guns either. I mean, I want to invest in companies. I want to invest in companies that do the national security things that I care about, right?Energy really matters. Infrastructure really matters. Semiconductors really matter, and artificial intelligence really matters. Those 4 or 5 things, everything else is a platform or a tool, right? Those are the 4 or 5 underpinning underlying assets or underlying things that I want to invest,
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that investors need to pay attention to, need to have some for the next 50 years.
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Yeah,
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we’re very much at the infancy stage. We’re in
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the very we are we are we.GPT only came out two years ago. It’schanged the entire world,
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and it’s and it changes from day to day every
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day. And so I think we just need to consider the fact that like guns and bullets won the last war.
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Guns and bullets are not going to the next.
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It’s going to be part of it, but it’s not gonna be the whole of it, right? We’re, it is going to be such a different environment, and I have very specific, very specific examples of where I think it’s gonna be different. Do
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we haveto worry about.A war in space, blowing up satellites and bringing the world, you know, bringing tech like bringing you blow up satellites, you bring communication to a halt.
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Yeah, so there’s some really smart companies that are also thinking about Alt PNT or all position navigation and timing, which is essentially GPS, right? So there’s a Google spinout called Sandbox that has a tool that they’re working through as well. That’s a whole different conversation. But my, my point to you is.I think that the next war is gonna be a space in AI war. AI I mean autonomous drones, right? So you’re gonna be really far away or you’re gonna be really, really close. And there’s that supply chain in the middle of it. It’s going to be a very different, it’s gonna look very different than the way it does now. The war in Ukraine has taught us that already, so.That means that anything in space is defensible and you have to be able to worry about
17:11 spk_0
it. You have to worryabout it. Yeah, no, you have to worry about it. I think that became clear.
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You have to know where things are. You have to know where your assets are. You have to know how they’re maneuvering. You have to know what’s maneuvering around you. That’s really, really important. Yeah,
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it’s gonna be, and it’s going to get more important as we move, you know, in the
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next 5 years.The amount of stuff that’s in space is going to significantly increase. Thank you, SpaceX for reducing the cost of launch and all the other launch providers. But like they’re reducing the cost of space. There’s gonna be more stuff up there and we got to be worried about it, right.
17:40 spk_0
So talk about because I want to just, I want to bring this into you. Talk about veteran owned defense startups. Are there ones that that investors should be paying attention to?
17:49 spk_1
There’s so many different, there’s, yeah, there’s so many different companies that we should be thinking about. And then, and like the veteran owner, the veteran founded companies, there’s these are mostly private, privately held, so most of them private health, yeah, yeah, but you can’t really get into them, can’t really get into them at this point. But like ID.me is a Blake Hall, who was the founder of that company. There’s another company called One Brief. There’s another, there’s a few others.
18:10 spk_0
Well, because there’s got to be a bunch of guys with, with defense experience that completely get it and understand kind of where this is gonna happen. Yeah,
18:19 spk_1
they really, they really do a great job though of blending business folks with defense folks to bring it together. So that’s what Andre’s done exceptionally well. It’s what Palanttier has done exceptionally well. And then they really live and they breathe in the organization.So,
18:32 spk_0
so explain to the, to the audience really quickly if you can, uh, what Andre is because, because it’s not a public name. People hear about it, but maybe people don’t understand what it, you know, how it ties in. Yeah,
18:46 spk_1
so they’re a what what they’re, they’re a hardware company, right? They create, they create hardware. They create military hardware. But the thing that’s really brilliant about that is the United States government has how to buy hardware.What they then do is they integrate their software into the hardware to show common operating picture. That’s really everything that’s happening. And so the beautiful thing about AndRIL is that they’ve created the hardware that’s the new modernization for the Department of Defense. It’s really, really smart. The DOD knows how to buy it and they know how to build prototypes that scale quickly. That’s a really great thing, right? So
19:18 spk_0
does a company like Andre.Create, create this hardware for the US.
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And allies and
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allies, yeah, yeah.
19:30 spk_1
They’re really wise about how they do it. I, I’ve got some, I’ve got some very good friends that work there, including two of my old bosses. So yeah, like they know what they’re doing andYeah, they, they don’t, they only work and there’s, and that’s the kind of the way this is working, right? You have to decide who you’re going to work with and who you’re not going to work with, right? There’s a very
19:46 spk_0
clear, very clear,
19:47 spk_1
and over the last couple of years, the investment in China has gone down. So everybody’s cap tables being cleaned off, make sure that there’s no Chinese investment in there. And if there is, it’s recognized. Other than that, yeah, like it’s like we’re, that’s how we’re navigating this.
20:00 spk_0
I want you to come back, you know, in a couple of months because I want to talk about because by then they’ll they’ll be more conversation about Andrew, more conversation about where we.In terms of defense, more conversations about how AI is changing the whole space.
20:11 spk_1
Yeah, and the headlines will have changed. So the consistent things will be the consistent things. We’re gonna have a new headline 3 or 4 months from now what we’re talking about as well. Well,
20:18 spk_0
listen, you know, I in every podcast with a recipe, so I want to get into my recipe because I think it, I think it fits you perfectly, but I, I think this conversation was great. I, I really want to have it again. But today I want to talk to you about the Sicilian style linguinian clam sauce, which is the dishes rooted really in the coastal culinary traditions of.Sicily. Now the Sicily is the largest island in the Mediterranean in an autonomous region of Italy. Now, while the classic linguini clam sauce really originates from Naples, the Sicilian version reflects the island’s unique history and cultural influences. So here’s, let me give you a little just brief history. Sicily’s cuisine is shaped by a strategic location with influences from Greeks, Arabs, Normans, and Spanish cultures due to centuries of conquest and trade. Seafood, including clams.Has been a staple in coastal Sicilian cooking since antiquity. Linguinala Vonngoli Sicilian style emerged as a regional variation of the classic Neapolitan dish. The addition of chorizo, a Spanish cured sausage, reflects Sicily’s historical Spanish rule during the 15th and 16th century. The the use of chorizo in this dish may also nod to Sicilian dishes that combine seafood and pork, such as those influenced by the Arab, Norman sweet and savory flavor.profiles. You can scan the QR code that’s on the screen for the full recipe and you can thank me later. Look, that’s a wrap for today’s trader Talk, but the conversation continues. Subscribe on Apple Podcasts, Spotify, Amazon Music, or wherever you get your podcasts. You got questions or topics that you want us to cover? Email me at tradedertalk@yahoo Inc.com because I’m always listening. Until the next time, stay sharp, stay disciplined and stay in touch. And until then, take good care.
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This content was not intended to be financial advice and should not be used as a substitute for professional financial services.
