The Dark Truth: Wars Create Bull Markets

Over the past several days, the war in the Middle East has pushed a once-niche technology directly into the global spotlight.

Drones.

We are watching in real time as unmanned aerial systems change the way modern wars are fought.

Swarming drones. Loitering munitions. AI-guided reconnaissance systems.

What once sounded like science fiction is now dominating the battlefield.

And markets are starting to notice.

Defense stocks tied to drone technology have been surging as investors realize something important:

Drone warfare is not a temporary development. It’s the future of military strategy.

The Pentagon, NATO, and defense ministries across Europe and Asia are all rapidly expanding drone programs. The reason is simple - drones are cheaper, faster to deploy, and dramatically more effective in many situations than traditional weapons systems.

A drone that costs $50,000 can destroy a tank worth millions.

That economic shift alone is enough to change the future of warfare.

And when military strategy changes, entire industries emerge around it.

That is exactly what we’re seeing happen in the drone sector right now.

In fact, I’ll be diving deeper into the market impact of this conflict - and why periods of war have historically created some of the biggest investment opportunities - during my Free Live briefing tomorrow (Thursday) at 12pm ET:

The truth is, markets don’t react to headlines the way most people think.

Sometimes the biggest geopolitical shocks end up creating powerful bull markets.

And right now we’re seeing some of those dynamics begin to unfold.

But first, let’s talk about how investors can gain exposure to the drone industry.

The easiest way to invest in the sector is through exchange-traded funds (ETF) focused specifically on drone technology.

One of those is the Defiance Drone and Modern Warfare ETF (JEDI), a thematic ETF designed to track companies involved in drone manufacturing, robotics, and autonomous systems.

Another is the REX Drone ETF (DRNZ), which focuses on companies involved in both military and commercial drone applications.

You would assume the two ETFS would be nearly identical, but that is not the case, there is very little overlap in the top holdings. Year-to-date DRNZ is up 18% versus a 12% gain for JEDI.

These ETFs provide diversified exposure across the ecosystem - from drone manufacturers to communications technology and counter-drone systems.

For investors who believe drone technology will become a core component of global defense spending - and I believe it will - ETFs offer a straightforward way to gain exposure.

But some of the biggest upside could come from individual companies directly building this technology.

Ondas is developing autonomous drone platforms and wireless communications networks designed for defense and critical infrastructure monitoring.

Its technology allows drones to operate as coordinated networks rather than individual units - something that could become extremely important for drone swarm operations in both military and industrial applications.

Red Cat is a fast-growing drone manufacturer focused primarily on military and government customers.

Its subsidiary Teal Drones produces NDAA-compliant drones, meaning they are approved for use by the U.S. Department of Defense and avoid Chinese-made components.

That positioning could become increasingly valuable as Western governments prioritize domestic drone manufacturing.

AeroVironment is one of the leaders in military drone technology.

Its systems - including the widely used Switchblade loitering munition - have become a key part of modern battlefield tactics.

Demand for these systems has been rising rapidly as militaries around the world accelerate spending on autonomous weapons.

Kratos sits at the intersection of drones, artificial intelligence, and advanced defense technology.

The company develops high-performance unmanned aircraft and tactical defense systems and is deeply embedded in next-generation military programs.

DroneShield operates on the other side of the battlefield.

Instead of building drones, it builds technology designed to detect and neutralize hostile drones.

As drone warfare expands, counter-drone systems are becoming one of the fastest-growing areas of the defense sector.

Drone warfare is no longer experimental.

It is becoming one of the defining technologies of modern conflict.

And that means an entirely new segment of the defense industry is emerging - one that could attract tens of billions of dollars in investment over the next decade.

In fact, the way markets behave during wartime often surprises investors.

History shows that geopolitical shocks frequently ignite powerful trends in specific sectors, from energy to defense to industrial technology.

That’s exactly what I’ll be explaining in tomorrow’s free live briefing:

I’ll walk through:

If you’ve been wondering how to navigate the current volatility - and where the real opportunities may be hiding - you won’t want to miss it.

Because sometimes the biggest investment trends emerge when the headlines look the scariest

Talk soon,
Matt McCall
Founder, NXT Wave Research