Reddit investors are discussing which short-term stock plays would stand to benefit them most if Russia engages in “total war” in Ukraine, coming to the general conclusion that U.S. oil companies are good quick-turn opportunities to make “tendies” while military industrial complex giants like Lockheed Martin might only be good investments if there’s a prolonged war or World War III.
The situation in Ukraine has and will continue to have major geopolitical and economic impacts across nearly every sector, and it’s also understandable that people interested in the stock market would want to discuss how the biggest news story on the planet would affect their investments. But it’s still jarring to see the language and investing strategy most broadly associated with meme stocks like GameStop be used to discuss the invasion of a country that could result in mass death and suffering (Surveillance firm Palantir is another favorite of Reddit investors).
Many top posts on the WallStreetBets subreddit right now are about the Russia / Ukraine situation, with some people suggesting that it’s a good time to buy the dip associated with economic instability; another person analyzed how and if the crisis would affect Domino’s Pizza.
“Whatever is going on in Ukraine should lead to some tendies in US Oil”
But the most direct discussion of Russia’s invasion of Ukraine happened on an audio “WSB Pre-Market Community Talk” call Tuesday morning, in which most of the conversation focused on the best potential investments given certain possible Russia scenarios. The general theme of the conversation was that buying U.S. oil companies and index funds would be a quick way to make money, while military tech companies would be a good play only if there is a larger war.
Because Russia is a big producer of oil and, specifically, supplies a huge amount of oil to Europe, the thinking is that America's NATO allies will become far more reliant on US oil, increasing its value. Germany has already frozen the Nord 2 gas pipeline from Russia.
“To start us off with the Russia play, assuming Russia continues to go further into Ukraine and the international response is slowed down, I’m assuming then that energy prices and oil in particular will start to tick up. So right now I’m holding leaps on USO, which is the US Oil ticker. The expectation is that now that US is energy independent, there will be a potential push for the US to export some of that to NATO allies in Europe and with that a slight increase in oil prices,” a user said. “The Russia, whatever is going on in Ukraine should lead to some tendies in USO.”
USO is an index fund that tracks the price of oil prices coming from West Texas. That fund is up 10 percent over the last month, while the broader stock market has dropped nearly 3 percent.
(There is no way to tell who, specifically, is speaking in the recording, though they are all members or moderators of the WallStreetBets subreddit.)
WallStreetBets is not alone here. A major topic of conversation across various news sites is how the instability of the Russia-Ukraine situation is affecting the stock market, and various stock advice websites are writing how to best protect investments or make money off the crisis. For example, StockMarket.com and Nasdaq.com just wrote a piece about “4 Trending Oil & Gas Stocks to Keep An Eye On Right Now,” and Business Insider wrote a paywalled article titled “How to Invest As Russia Invades Ukraine: 4 Common Strategies.” SeekingAlpha, MarketWatch, InvestorPlace, and USA Today have all run articles about best Ukraine-Russia-related investment strategies over the last few days.
Back on WallStreetBets, users discussed how and when to start buying America’s defense contractor stocks.
“Anybody have any other plays coming out of any other sector besides energy? We know what we’re doing with oil,” one person said.
“How long is the war going to go? How many people are going to get involved? Obviously, long-term, aerospace, all that is great. Any sort of defense company. But if it’s just a short-term skirmish, oil, probably,” a third chimed in.
The conversation then turned to how it would be “hilarious” if Trump got re-elected because of the Ukraine crisis, and that there “would be a significant jump to the stock market” if that were to happen. Most people agreed investing in defense companies was a risky long-term bet that could pay off in the event of widespread death and destruction.
“What do you guys think about buying up Lockheed Martin and other war manufacturers from the US industrial complex? Because you are putting on a risk that if Russia doesn’t invade, your whole play doesn’t work,” a participant said. “What do you think of the likelihood of invasion?”
“You don’t send tanks for a peacekeeping mission,” someone interrupted.
“I mean an invasion of Kyiv,” the first person responded. “I’m talking about full out, total war.”
“We actually have a lot of equipment that is sitting unused right now,” a third person said. “Before we can get to the point where we’re looking at new contracts for Lockheed, we need to look at—are we going to burn through the old contracts where we’ve already got contracts set aside, and I don’t think we will.”
“I would invest in the military industrial complex if we go to World War III,” another decided. “But other than that, I would just put it somewhere else.”