Investing in a war stock can provide you with a way to diversify your portfolio and bring in steady gains. Although war is never something that is desirable, there are certain companies that will benefit from it. Here are the basics of war stocks and what they can do for investors.

War Stocks

War stocks are stocks in corporations that stand to profit substantially during times of war. These types of stocks are also referred to as war babies or defense stocks. There are many different types of companies that will be able to make more profits during a war. Therefore, this classification of stocks includes a wide variety of companies and industries.

Types of Companies

There are many different types of companies that could issue war stocks. An example is a company that supplies ammunition to the military. Another example of a war stock is Boeing, as they supply aircraft to the various military branches. You have companies that produce helicopters, missiles, tanks, communications systems and other types of technology.

In addition to companies that produce products used during the fight, are many other companies that stand to benefit from war. For example, you have several companies that will be involved in the rebuilding efforts after a war is completed. Many of these construction companies will land billions of dollars' worth of construction projects. You also have several companies that are involved in biotechnology that are working on vaccines and other treatments that can aid during chemical warfare. Companies that supply security are also able to benefit from war. 

Market Performance

These types of stocks tend to behave in similar fashion when compared to one other. During peace time, the stocks do not tend to go through rapid periods of growth. In most cases, they will remain consistent and provide steady growth. Then, whenever a war seems imminent, the prices of the stocks will typically increase significantly. Throughout the war, the prices of the stocks will tend to stay high. Then, whenever a war is completed, the prices of these stocks will tend to go back down to the levels that they were at before the war started.

In some cases, the companies that have war stocks will also have several other sources of revenue. For example, Boeing has many other endeavors besides supplying aircraft to the military. Their stock tends to move more independently than other types of stocks that are more focused on the war.

Investment Consideration

Investing in these types of stocks is not for everyone. Many people label these stocks as "sinful" stocks and do not want anything to do with them. Since these companies are essentially profiting from death and destruction, many individuals do not want to support these companies by investing in them. Getting involved in this market is definitely a personal matter that you will have to consider.

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