Defence stocks, AI, and the Carabao Cup

Out of 195 countries in the world, 92 are at least partially involved in conflicts beyond their borders. Some are more hostile than others, and with Ukraine and Russia still at war, Europe re-arming, and the Middle East firing missiles in all directions again, defence spending isn’t likely to come down anytime soon. Time to pile in and increase our allocation to the sector? 

Unfortunately, that’s as far as I got this Sunday. After nearly eight years and more than 400 editions of this weekly blog, writer’s block finally caught up with me. When my wife suggested I use ChatGPT, the idea was resolutely dismissed, after all how could a machine do that which takes years of experience to hone and thousands of attempts to craft?

Here is what the AI suggested in a mere three seconds and one sentence of instructions: Global conflicts are driving demand for advanced weaponry, providing secure revenue streams for defence companies many of which have long-term government contracts, providing a level of predictability in earnings. However, investors should also consider the risks. While wars can drive short-term stock surges, prolonged conflicts can lead to market instability, supply chain disruptions, and unpredictable policy shifts.

The first question that came to mind was did I just make myself redundant? The second question was how much of what we are reading in the media is actually written by humans? Then thoughts of The Matrix (1999, yes, the movie is that old) and Nothing else matters (Metallica 1991, yes, the song is even older), gave way to the only question that mattered: did Liverpool really just lose the Carabao Cup?