I read an article within the past month in either Time or Fortune that stated that historically defense stocks rally into a conflict build-up and then begin to drop as soon as the shooting starts. I have not reviewed historical prices and events to see if this is true but it sounds likely. I think it is probably just a specific recurring manifestation of buy on rumor...
The longer term growth of defense stocks is predicated on peacetime needs as much or more than spikes during wartime. Military strength was a fraction during the previous administration of what it was to his predecessor. Just the possibility of threat by terror or in N. Korea, Phillipines, Columbia etc. will fuel military expansion and weapons development. What administration holds office in the next term is the crystal ball I'd choose to see. Long term investors should watch the political horizon. Day traders, stay tuned to CNN.
I had figured the same, hence why I was loading up on the options today (and unfortunately yesterday). The idea that it will be a "quick war" is why the stock is falling, but it might not be as quick as some think. Looks like it will be quick...hopefully I am not making a big mistake.
Long 1000 shares and 100 april 50 calls.
unforunately, I think it is the old 'buy the rumor, sell the news' syndrome. definitely some profit-taking going on. but since Iraq is not the only problem spot, (ie. N Korea), I think defence stocks are still a good bet.
Nah...not the buy on the rumor, sell on the news thing. It's some profit-taking/shorting/short war theorists pushing it down. I get this feeling we'll see $48 before we see $55 again, so I may have bought early. In a down market, this stock will move higher. With the strength in the averages, profit-taking was inevitable in a "defense stock".
ATK bounced back from 43 to 53 in about a week. IMO we are seeing some profit taking. I'm in at 48 and wish I had sold at 53!!!! I'm comfortable holding for a bit and feel ATK will see 53 again soon.
By The Way:: I have been wrong before!!!!!!!
An article came out about how defense firms wouldn't benefit that much from this conflict - since our stockpiles are already so huge. I think the remark is true, but it's also shortsighted remark, because the reality is that our country will have a significant demand placed on our military to resolve ongoing conflicts in this region, as well as elsewhere that we choose to police regimes and quash terrorism. So, the long-term potential of ATK is pretty bright.
It's a very risky time to be in the market, of course, because any action - be it Iraqi military or terrorism or otherwise - that does not go in our favor will likely spark a pretty steep sell-off. If you are willing to gamble that everything will go our way in the coming weeks, then you could stay in the market, but you also have to realize that the economic indicators are pretty bleak, and once we are over this "war rally" investors are going to have to reconcile with the reality of our weakening economy.