No Time for Defense

War is quickly shifting the outlook for investors. Here's how to position yourself

Wartime investing isn't what it used to be. The Iraq war won't require any massive buildup of materiel that would stoke heavy industry and the profits of defense contractors. America's military might helped the conventional fighting go quickly in the war's early days. But the generals on Wall Street, expecting as much, have been shooting down defense stocks for months. Yet stocks overall tend to do well after the U.S. engages in hostilities, and this time should be no exception. The Dow ran up 8.4% last week--its best weekly gain in 20 years--and moved into positive territory for the year.

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