Disclaimer: I am not a licensed securities dealer or adviser. The views here are solely my own and should not be considered or used for investment advice. As always, individuals should determine the suitability for their own situation and perform their own due diligence before making any investment.
I made a big mistake when I first started investing, and lost out on some big gains. I didn’t lose money, but I could have made a lot.
I believe there are two things that causes stocks to change their price: politics and financial fundamentals. Politics can change on a dime, along with the Federal Reserve’s decisions. Tricks are played, philosophies change, and corruption is created. The same can be said about financial statements. That is why news about politics and companies are important in investing, which is something I learned early on.
Halliburton was losing enormous amounts of money from lawsuits at the of the 1990s, and my money was put into Halliburton with the belief that the oil company would rebound after the recession of 2000. It did go up a few dollars per share, but not to the extent I wanted it to. I eventually got out of it, just prior to the Iraq War. Obviously, I wish I would have stayed in.
Dick Cheney was at one time in charge of Halliburton, and was then the Vice-President of the biggest and most powerful corporation on the planet: the United States. Dick Cheney, a devout neoconservative, wanted a war with anyone that seemed like a bad person, with little thought as to who would replace the terrible dictators. Iraq was something that the Jacobins and neoconservatives had long wished to change by blessing them with liberal free markets and democracy. However, Dick Cheney needed the support and ear of the President, George W. Bush. There was no man closer to President Bush than Karl Rove.
Karl Rove was President’s campaign’s chief strategist, who later became Bush’s senior adviser, which was pretty much unprecedented in U.S. history. Generally, political operatives do not become advisers to the President, for fear that the policy decisions and governance will be based on politics, not what is best for the country. However, that is the role of Karl Rove, to be the political decisions maker for things like medicaid and war.
According to Bush’s Brain: How Karl Rove Made George W. Bush Presidential, Karl Rove had the President’s ear and attention. Both avid readers, Rove and Bush balanced each other out. Rove was bookish and could read the political tea leaves years into the future (and if they were not going the way he wanted, he made it turn out the way he wanted). Bush on the other hand, though an avid reader, wasn’t seen as nerdy, but rather the down to earth guy that everyone wants a beer with.
Though voters would like to have a beer with Bush, they weren’t happy with the way things were going. Almost none of the campaign promises came to fruition, and the economy wasn’t growing the way that it was promised. Bush’s tax cuts made no logical sense, and was denounced by even supply-siders, as the taxes that were cut had no direct connection to productivity, and no connection to the Laffer Curve. Rove, already thinking about the next election, needed something everyone can get behind: killing bad guys (it was right after 9/11).
Cheney and Rove, helped convince Bush that Saddam Hussein was a terrorist supporter, and especially supported al-Qaeda, the organization that murdered thousands of innocent people in New York, Washington D.C., and Pennsylvania. There were obvious problems with this “connection”: (1) Saddam was a secular Sunni whose only religious belief was that he himself was the one true god, ruling over a country of religious Shi’ites (obviously, Saddam would not want to link up with religious zealots who were the sworn enemies of the people of his country); (2) the international community stated that Saddam had no weapons of mass destruction, or no direct ties to al-Qaeda; and (3) the CIA was saying that there were no weapons of mass destruction or direct links with al-Qaeda (which the Vice-President’s office altered the report to say otherwise).
Iraq is rich in oil, and war in the country would destroy infrastructure and oil production. Someone would need to help the Iraqis with their reconstruction. Luckily, Halliburton specializes in this very thing, and coincidentally, its former Chairman and CEO was the sitting Vice-President. The answer was clear: Halliburton would help rebuild Iraq after the destruction caused by the war.
I was too young and inexperienced to see that Halliburton, suffering from settlements and lawsuits, would be rescued by war. The connection, for those who were watching closely, was visible. Those who paid attention received big returns. I received a small return, but a big lesson. After that, I picked up and read Bush’s Brain: How Karl Rove Made George W. Bush Presidential so I could be more attuned to what kinds of plans and tricks political operatives play. This book demonstrates how far ahead a political operative thinks.
The lesson to remember is pay attention to company news, but also pay attention to the politics.
War does make good money for certain corporations and firms. This relationship has caused some lobbyist to promote war in the name of freedom and, ironically, peace. The great general, and later president, Eisenhower warned America about military profits in his farewell speech, calling an end of the military-industrial complex. The warnings of General Smedley D. Butler gave in War is a Racket: The Antiwar Classic by America’s Most Decorated Soldier still ring true today. Every time a bomb drops, Pratt & Whitney’s revenues rise.
General Butler was first mocked when he said he was asked to participate in a fascist coup to topple President FDR, which was sponsored by some influential businessmen. At first it was considered so ridiculous it was not seriously investigated, until Congressmen decided they better look into it, finding out that what the good general said was true. It was a well known fact that Henry Ford looked to Hitler as a hero, received a medal from the Fuhrer, and even continued to do business with Germany to help out the Nazi war effort.
Investing in defense companies that contract with the military can make you good profits, and for the reasons I detail below, it seems they will continue to be a good investment. However, I refuse to invest in them for moral reasons, and they do not have any interest in preserving the safety of Americans.
As Scott Horton’s new book Fool’s Errand: Time to End the War in Afghanistan details, the reason for fighting in Afghanistan was not to eradicate al-Qaeda and those who were responsible for the 9/11 attacks, but mainly for political reasons. The Taliban’s foreign minister, prior to 9/11, travelled to the US embassy in Pakistan to warn about what they believed would be an attack on America, but the Bush administration ignore them. The Taliban offered to give up the al-Qaeda network, which the Taliban and the Afghan people saw as an annoyance and embarrassment, to any third country the Americans chose, including Canada or the United Kingdom, who could extradite them to the US. But America refused. The Taliban made several offers to get rid of bin Laden, even offering their services to help the Americans assassinate him, but America refused.
After the 9/11 attacks, America focused on the Taliban, not al-Qeada. According to officials in the Bush administration, this was because the administration could show “success” if it topples a regime, instead of eradicating the 400 invisible al-Qaeda members. Therefore, the bulk of the concentration of troops were in the wrong part of Afghanistan. General Mattis begged for more troops to attack al-Qaeda, but the Bush administration had to show proof of toppling a country, not terrorists and justice. That’s why Bush sided with Communists rebel groups. They were formerly enemies under the Bush I administration. We paid off several tribesmen to help fight terrorists, but as one tribal leader bragged, he looked the money and personally helped bin Laden escape to Pakistan. Some communists took our money and helped out al-Qaeda as revenge for attacking communism in the past.
Only in Afghanistan could the US give a few billion dollars to Osama bin Laden to help fight communists, and then later give a few billion dollars to communists to help fight Osama bin Laden. Due to this crazy behavior that the military-industrial complex supported, al-Qaeda membership went from 400 to 40,000, and our “friends” that we are paying millions to are helping them. Also, the mastermind behind the Twin Towers bombing was granted a visa to come to America, because he was heroic freedom fighter against the Russian Communists. That’s correct, we gave a visa to an al-Qaeda terrorist because he was an American hero. Makes sense in the land of DC, or as David Stockman (former OMB director under President Reagan) calls it, the Imperial City. To make matters worse, the US does not know how to approach the Middle East in a manner that is helpful, as We Meant Well: How I Helped Lose the Battle for the Hearts and Minds of the Iraqi People (American Empire Project) describes in detail. Peter van Buren, the author, was a diplomat, who witnessed first America’s inability to properly build a working Iraq. The book would be outright comical if it wasn’t real.
If that isn’t crazy enough, Osama bin Laden’s goal of 9/11 was to provoke the Americans into fighting in Afghanistan just like the Soviets. The country earned the nickname “graveyard of empires” for a reason. Bin Laden wanted the Americans to spend over a decade in the country fighting a war with no clear victory, just the the Soviets. We took bin Laden up on that offer, and has so far caused our debt to reach $20 Trillion, with no discernible victory. Afghan and Iraq are now both worse off, al-Qaeda membership is extremely high, and a new Sunni terrorist organization, the Islamic State, is now feared by all Westerners. The region is now more unstable than ever before, and the Taliban once again controls large parts of Afghanistan. But, hey they were toppled. And if you paid attention to politics, you could have made a lot of money. “Mission accomplished” for the military-industrial complex.
However, I stay away from these types of investment “opportunities.” Instead, watch politics for opportunities that are opposed to this kind of behavior. Invest in companies that will bring efficient water systems, healthcare, or the like. Even an annoyingly politically-connected company like Halliburton was worth investing in, since they at least brought jobs to the Middle East.
So I will leave off with the emphasizing the lesson I learned and what I’m doing now. Politics influence markets, just like fundamentals. Trump wants to ramp up activity in a war that cannot be won. He wants to permanently repeal the debt ceiling, which means he wants more debt. The Fed cannot sustain forever a war and false prosperity. War appears to be here forever, prosperity won’t be. Therefore, I’m sticking with gold and shorting the S&P 500. If I was you, I would purchase these books I listed in this article and see for yourself the craziness of our foreign policy and its coming effect on the economy.
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