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What To Invest In During War

Last updated 03/15/2024 by

Justin Smith

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Wars can increase the volatility of markets, but they typically don’t have a long-term impact on them. Defense stocks often become popular because of their direct impact on conflicts, but demand for safe-haven investments like gold and even cash can also increase during periods of unrest. Taking a long-term approach to investing and staying the course, even during a war, is often the best strategy when you already have a well-diversified portfolio.
Unfortunately, war has always been a fact of life. But with Russia’s recent invasion of Ukraine, the economic impact of war has hit millions of people across Europe in what is one of the largest armed conflicts since World War II. Upon news of the invasion, stock markets tumbled around the world and the global economy experienced an economic downturn.
Despite the initial drop, index funds and stocks then rose, which created an opportunity for investors to diversify and make gains in their portfolios. Investing in stocks that typically perform well during wars ⁠— such as defense and energy stocks, as well as in safe-haven assets like gold ⁠— are popular tactics to weather the risk and uncertainty that come with periods of unrest. However, you may not need to make any changes to a well-balanced portfolio. Nobody can predict exactly how a conflict will affect the markets, but here are some things to consider.

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What types of stocks go up during war?

Even with the initial decline and uncertainty that come with wars, certain industries typically increase during conflicts. These stocks include ⁠defense and energy sectors that directly relate to war as well as safe-haven investments like gold and cash.

Defense stocks

As you would expect, defense stocks generally do well during wartime. Defense stocks include companies like Lockheed Martin, Boeing, and Raytheon, which are three major defense companies in the U.S., with large cash flow and generous dividends.
Defense companies supply both the U.S. and their allies with weapons, airplanes, and technology. This means that any increase in demand for these products due to something as large as a war will likely benefit the stock prices of these companies.
Some tech stocks can also be good investments if they provide defense- or military-related services. For example, L3Harris Technologies Inc. is a military electronics technology company that provides communication and other equipment.

Energy stocks

Oil prices are typically affected during war, and prices fluctuate wildly. For example, Russia’s invasion of Ukraine greatly impacted oil prices because Russia is one of Europe’s biggest suppliers of oil and natural gas. Because of the severe economic sanctions imposed by the U.S. government, including a ban on importing Russian oil and natural gas, oil prices in the U.S. are at a 14-year high.
As a result, many oil companies are seeing the price of their stocks skyrocket. Exxon Mobil, one of the largest publicly traded oil companies in the world, is already seeing greater margins. The company’s stock is up 55% in the past six months alone.


Commodities like gold historically do well during wartime and times of inflation. For instance, after the Russian invasion of Ukraine, gold, silver, palladium, and copper rose to record highs. With Russia being one of the biggest producers of gold in the world, prices will likely continue to climb.
Gold in particular is viewed as a safe-haven asset that serves as a hedge against inflation. Investors like gold because its price tends to rise with the cost of living, which it does during times of inflation.


Cash is not as popular of a choice among investors, but it can still provide peace of mind when problems of war arise. For example, the U.S. dollar jumped to a two-year high upon the Russian invasion of Ukraine.
Cash may not offer as many growth opportunities as stocks, but currencies like the U.S. dollar are still considered safe-haven assets.


Exchange-trade funds, also known as ETFs, can help you diversify your investment portfolio. They track a particular index, sector, or commodity, but can be bought and sold on a stock exchange just like a regular stock.
ETFs exist for a range of industries, including war-related ones like defense and energy.

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What types of stocks go down during war?

The relationship between war and market outcomes is not easy to predict. However, some types of stocks, such as luxury brands and companies in the travel industry that rely on discretionary spending will typically not perform well during wartime. If the conflict is widespread, people usually curb travel to stay closer to home and cut unnecessary expenses.

Does the stock market do well during war?

Historically, the stock market stays pretty resilient during times of war. However, it all depends on the specifics of the conflict and the context in which happens. Recent conflicts in the Middle East, for example, didn’t have much of a long-term effect on the stock market. Russia’s invasion of Ukraine was a little different.
The prospect that the U.S. and NATO allies could get pulled into the war has increased stock market volatility and raised gas prices around the world because Russia is a major supplier of oil and natural gas. For example, with the recent Russian invasion, the S&P 500 tumbled in the days after the war began by as much as 7%. However, it recovered in just a month and was even trading at a higher level than it had been before the invasion.

When does the stock market perform poorly during wars?

Because international relations impact the volatility of stocks, even those that perform well during wartime may experience an initial dip. Typically, stocks tend to perform poorly in the early stages when extensive warnings and signs begin popping up. But once the war actually begins, stock prices can even increase in some cases.

What investments were popular during World War II?

As World War II began, the US was just beginning to come out of the Great Depression. Unemployment was high and many across the country were struggling.
However, by the time the U.S. entered the war, it helped provide a major source of economic growth. The Dow increased 50% over the six years of the war and helped to fully bring the U.S. economy out of the slide it had been in since the Great Depression.
  • Gold. Similar to modern times, gold is considered a safe-haven investment, and a popular place to put your money during times of economic uncertainty. The price of gold stayed fairly consistent during the war, going from $34.42 per ounce in 1939 to $34.71 per ounce in 1945. Since the price didn’t decrease, gold became an attractive investment.
  • War bonds. War bonds were popular during World War I and II as ways that citizens could help the U.S. government finance the war effort. First labeled as defense bonds, war bonds sold for 50% to 70% of their face value and were guaranteed by the U.S. government. However, they also paid lower interest rates and did not pay interest over the life of the bond.

How to adapt to inflation

War can often increase inflation if public debt and taxation increase but consumption drops. Inflation rates recently reached 40-year highs in the United States, putting a burden on many consumers.
When inflation is high, most consumers pull back from high-risk opportunities and focus on more of their day-to-day expenses. Fortunately, there are steps you can take to help curb the effect inflation has on your wallet, such as making a budget and creating an emergency sinking to help finance any unplanned expenses.
In addition to budgeting, remember to diversify your portfolio. Don’t put all your eggs in one basket by only investing in safe-haven assets or going all-in with defense stocks. Rather, build a well-diversified that can weather whatever the geopolitical zeitgeist throws at it.

Key Takeaways

  • Defense stocks, energy stocks, commodities, cash, and ETFs are stocks and investments that typically do well during times of war and conflict. However, it is often best to build a well-diversified portfolio than try to pick the individual winning stocks during a conflict.
  • Travel stocks and bank stocks usually do not perform well during wartime. If the conflict is widespread, people usually curb travel to stay closer to home and cut costs. Additionally, because war affects the economy, bank stocks are not often considered high performers.
  • Stocks that do well in war tend to sink before the war begins and rise as the conflict continues.
  • Supply chain issues coupled with high demand and the outbreak of war have caused inflation to skyrocket to 40-year highs in the United States.
Related reading: Whether investing in war or peace time, make sure you follow the rules to avoid getting into trouble. If you lean toward the frequent buying-and-selling pattern of traders rather than buying and holding, one rule you should familiarize yourself with is the three-day settlement rule.

SuperMoney may receive compensation from some or all of the companies featured, and the order of results are influenced by advertising bids, with exception for mortgage and home lending related products. Learn more

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