The U.S. might possess interstellar technology...
Last month, former intelligence official David Grusch dropped a bombshell. He said the U.S. military has recovered potential alien spacecraft. Even stranger, he told Congress that U.S. companies are trying to replicate the machinery.
Grusch's claims are controversial. And it's not hard to see why – they sound like science fiction.
But a recent rush of public disclosures about UFOs corroborates his story. More important, regardless of whether you believe Grusch or not, his claims have changed the game... And it's setting up a likely win-win scenario for investors.
Let me explain...
We may not be alone in the universe...
In 2020, the Pentagon claimed three videos that were leaked online years ago. The footage shows U.S. military encounters with Unidentified Aerial Phenomena, or "UAPs." (That's the official name for UFOs.)
The agency couldn't explain the craft shown in the footage. It just confirmed that the tapes were real, "to clear up any public misconceptions."
A few months later, Congress approved a Pentagon task force to investigate UAPs. The commission reported 144 credible sightings from 2004 to 2021. But it could only explain one of them, and it didn't rule out alien origins for the rest.
Fascinatingly, ex-Pentagon official Luis Elizondo told 60 Minutes last year...
The government has already stated for the record that are real. I'm not telling you that. The United States government is telling you that.
Of course, that still doesn't prove where the objects come from. The UAP Task Force has been exploring five potential categories: airborne clutter, natural atmospheric phenomena, U.S. government or industry developments, foreign military technology, and a "catchall" bin.
In the meantime, these revelations are stirring up a lot of interest... enough to move the needle.
Market research company Piplsay conducted a survey after the Pentagon confirmed its leaked footage. It revealed that 43% of Americans were more interested in aliens after the disclosure.
That's a huge chunk of the investing population... which brings us back to what this all means for the markets.
It might sound kooky. But Grusch has given us a profound bull case for U.S. aerospace companies.
These businesses now offer what's called asymmetrical upside...
Normally in markets, your reward is proportional to your risk. If you buy something safe, you won't lose money... but you won't gain much either.
The aerospace business is extremely safe. It's driven by durable demand and long-term government contracts. These are solid businesses that we'll always need. So, the risk of investing in these companies is low... but the reward is typically low, too.
Grusch's claims have changed this dynamic. Now, we have much higher upside potential in aerospace than you'd expect... while the low-risk, everyday functions of the industry remain the same. In other words, the upside is asymmetrical to the risks involved.
I reached out to my friend Andrew Chanin for his thoughts on the matter...
Andrew is the CEO of exchange-traded fund ("ETF") company ProcureAM. He has managed many forward-thinking funds over the course of his career. In 2019, he formed the Procure Space Fund (UFO), which gives investors exposure to a basket of space-industry companies.
Andrew broke down the implications of Grusch's claim. In short, this asymmetry means these companies deserve your attention today...
What if our defense companies do have access to alien materials and technology? They're going to try to reverse engineer them. Probably use some things for the defense industry. But how far ahead could they be? Are we just waiting for some breakthrough? And all of a sudden, you know, the next greatest invention known to mankind is going to come out of nowhere. It's possible.
To be fair, as captivating as this idea is, we could just be chasing a bunch of interstellar debris. But again, the risk to investors is low compared with the potential gain.
That's because these are great companies to own today – even if reality turns out to be much more mundane...
We just got a glimpse of a near-civil war in Russia. Mercenary leader Yevgeny Prigozhin marched on Moscow less than two weeks ago. No one knows yet how destabilizing this might be, or what could come next.
Meanwhile, tensions between the U.S. and China remain high. China just released a new foreign-policy law that asserts its right "to take corresponding countermeasures and restrictive measures" against acts that it believes "endanger China's sovereignty, security and development interests."
Now is the time to buy aerospace. It's a win-win scenario.
If you want to play this setup in aerospace and defense stocks, UFO is a great way to do it. You could also buy sector leaders like Boeing (BA) and General Dynamics (GD).
These are high-quality stocks producing the technology we need in a dangerous world. And thanks to this sudden asymmetrical upside, the sector is a great way avoid major losses... with the potential to juice your returns.
Sean Michael Cummings
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NEW HIGHS OF NOTE LAST WEEK
Apple (AAPL)... iconic tech brand
Dell Technologies (DELL)... laptops and PCs
Applied Materials (AMAT)... semiconductors
Workday (WDAY)... cloud-based software
Dropbox (DBX)... cloud storage
Uber Technologies (UBER)... ride-hailing giant
Fiserv (FISV)... digital payments
Intuitive Surgical (ISRG)... medical technology
McKesson (MCK)... health care giant
Eli Lilly (LLY)... pharmaceuticals
U.S. Foods (USFD)... packaged foods
Take-Two Interactive Software (TTWO)... video games
DraftKings (DKNG)... sports-betting leader
Ferrari (RACE)... luxury cars
W.W. Grainger (GWW)... industrial supplies
Delta Air Lines (DAL)... airline
United Airlines (UAL)... airline
Copart (CPRT)... "junkyard giant"
FedEx (FDX)... package delivery
NEW LOWS OF NOTE LAST WEEK
Pfizer (PFE)... pharmaceuticals
AbbVie (ABBV)... pharmaceuticals
Repligen (RGEN)... life sciences
Walgreens Boots Alliance (WBA)... retail pharmacy
Keurig Dr Pepper (KDP)... soft drinks
Pilgrim's Pride (PPC)... poultry