Perpetual State of War

The United States has been at war 93% of the time…

That means that we’ve been involved in some type of conflict in 222 out of 239 years since our country’s founding back in 1776.

In fact, the only time the country went at least five years without war (1935-1940) was during a Great Depression “isolationist” period.

In other words, you could be reaping a fortune betting on a perpetual state of war – if you know where to look.

Do these statistics continue to measure up even in modern times? You bet they do.

Despite globalization and the perception that all is copacetic, military hotspots continue to flare up and fan the flames of war. Greed, profits, nationalism, security, etc. all play their role to some degree.

In Afghanistan for example, former president George W. Bush initiated U.S. military involvement there following the terrorist attacks that took place on September 11, 2001.

What started out as a small operation quickly escalated to a stable 30,000 boots on the ground.

And then in the early years of his first term, President Barack Obama elevated those numbers substantially in an effort to boost security in the country and counter a resurgent Taliban.

The chart below gives a sobering visual of the ramp up in military involvement over the years.

Troops in Afghanistan Over Time 300x187 - Perpetual State of War

In addition to the 4,000 military personnel working as advisers and trainers overseeing various infrastructure projects, the president announced the deployment of 30,000 more troops as part of the broader push to support and train an Afghan Security Force to protect the civilian population.

By 2011, the U.S. had been in the country for nearly a decade. Even a phased withdrawal meant that 68,000 troops would still remain throughout the remainder of 2012.

Through an agreement signed between the U.S. and Afghanistan, Afghan forces were slotted to direct combat operations primarily on their own by the end of 2013, followed by the complete removal of all U.S. troops by 2015. Only trainers and a small contingent of troops countering any lingering terrorist efforts were to maintain a presence.

But then the backpedaling began…

White House press secretary Jay Carney recently stated “Obama never said that all the troops would be out.” and that while the U.S. would transfer security to Afghan troops by the end of 2014, all U.S. troops would not be out of the country by that date.

He would go on to add, “Everyone understands what the president’s policy is, which is a full transition to Afghan security lead by 2014”

Security handover plans took yet another step back when a sudden and sharp increase in attacks by locals who were supposed to be helping U.S. and NATO personnel materialized.

While there were several specific reasons for this, we ultimately found it necessary to vet new recruits while circling back to those who were already tasked to maintain control once U.S. forces had finally left.

When the handover of security from NATO to Afghan forces was complete Afghan forces would oversee 403 districts within the country’s 34 provinces.

Afghan President Hamid Karzai announced, “Ten years ago, there were no Afghan national security forces… now you have 350,000 Afghan troops and police, a formidable force.”

But under a plan announced in May 2014, the number of American troops was supposed to fall to 9,800 by January 1, 2015. Instead, the U.S. will keep up to 10,800 troops for the first few months of 2015 and then restart the drawdown, which is scheduled to reach 5,500 troops by the end of 2015.

But a true quagmire is never without timely events that ensure its prey doesn’t slip too far out of reach…

In a recent story that hasn’t gained much press, Taliban forces overran the city of Kunduz back on September 28th of 2015.

The capture marked the first time since 2001 that the Taliban had taken control of a major city in Afghanistan.

Following a review of troop presence in Afghanistan, President Obama stated that Afghan security forces are not as strong as they should be and that the security situation in Afghanistan is still very fragile with risks to deterioration in parts of the country.

I’m reminded of a scene in The Godfather III where Michael Corleone, a worn and aged Mafia family leader, says “Just when I thought I was out… they pull me back in.”

Let’s think about this for a minute.

Keeping troops in Afghanistan when he leaves office in 2017, President Obama casts aside the promise made to end the war on his watch. Instead, we are faced with an alarming reality that the conflict will be handed off to his successor.

The next president will become the third U.S. commander-in-chief to oversee the war and attempt to bring it to a close.

Despite your stance on our foreign policy decisions, there is no escaping the fact that war on terror has drained the treasury. The following chart only proves my point.

War on Terror Cost 300x216 - Perpetual State of War

Putting the cost of the “war on terror” into perspective, the Vietnam War when adjusted for inflation is estimated to have cost only $686 billion.

But in crisis, we have to search for opportunity.

And sometimes you have to piggyback on the coattails of those who stand to benefit the most from such policies, whether they are publicly traded companies with a backdoor profit angle or simply an effective use of investment vehicles that help shield your portfolio against unwarranted geopolitical situations.

In a game of competition, if someone is losing then you can surely bet another is winning. Unfortunately, many investors fail to reach this simple, yet logical conclusion. Follow the money…

Good investing,
Reflex Investor

P.S. Check out our comprehensive financial newsletter, Reflex Momentum Report. It uncovers “under the radar” investment opportunities, marrying fundamental quality with critically important technical timing to enhance potential returns.

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