When people talk about defense investments, especially in tense periods such as the one we are living through, the logic often sounds simple: More threats mean bigger budgets, and bigger budgets mean more money. But investors who approach the defense sector with this linear mindset quickly discover a gap between expectation and reality.
Unlike other industries, defense does not respond to headlines. It responds to timelines.
This gap is likely to become even more pronounced as Israel approaches a general election toward the end of 2026.
In election periods, defense inevitably takes center stage in political campaigns with promises to strengthen the military, declarations about industrial independence, and commitments to increased budgets. Yet behind the scenes, the reality is often far more complex.
Election cycles tend to bring delayed budgets, postponed decisions, frozen tenders, and professional ranks waiting to see who will ultimately shape policy. For investors unfamiliar with this dynamic, the disconnect between political noise and actual economic progress can be deeply confusing.
This is where the most common mistake lies: assuming defense behaves like a consumer or hi-tech sector, where decisions are quickly translated into execution. In practice, defense is an industry built on long processes.
When a government decides to increase defense spending, the first step is usually declarative. What follows are discussions, committees, documentation, and approval processes. Only then are tenders drafted, operational requirements defined, systems evaluated, and planning and engineering processes initiated.
Manufacturing comes at the very end – often years after the original declaration or the initial identification of an operational need. In many cases, years pass before a decision "on paper" becomes an actual order – and even longer before the revenue appears in the financial statements of the companies involved.
Put simply: In defense, the money always arrives late
This is also why many investors experience frustration. They see rising budgets, hear about rearmament, buy shares – and then discover that financial results do not change overnight. It can feel like the market is failing to reward the sector when, in reality, it is simply operating on a different clock. More often than not, those who exit too early miss the very moment when long processes begin to mature.
Beyond timing, it is crucial to understand the nature of demand. When a country needs air defense systems, counter-drone solutions, or secure communications, the question is not whether to buy, but how and when.
Price matters, but it is rarely the factor that cancels procurement altogether. That is why public debate tends to focus on budget overruns rather than on canceled systems.
Defense is not a discretionary product; it is a basic necessity. Practically speaking, this creates demand that is highly inelastic and largely insensitive to price.
Product life cycles in defense are also fundamentally different from what most investors are used to. Defense systems are not replaced every two years like smartphones. These are platforms designed to operate for many years – sometimes decades – requiring ongoing maintenance, upgrades, and spare parts.
For companies that successfully integrate into the supply chain, this translates into exceptional long-term stability.
Moreover, the sense of insecurity is fluid. It does not stop at physical or political borders and creates opportunities for defense companies worldwide – not only in countries directly involved in conflict.
The conclusion is clear: Investing in defense is not a bet on a single news event or on a specific election outcome. It requires an understanding of process, politics, and – above all – time. It is less suitable for those seeking quick returns, and far more appropriate for investors willing to look beyond the next headline.
Taken together, these factors create a unique investment profile. When a "defense wave" emerges, companies in the sector benefit from sustained global demand, low price sensitivity, and long-lasting procurement cycles.
For the patient investor, this combination can represent a rare long-term opportunity.
For the non-professional investor, the most important question is not "What will happen tomorrow?" but rather "Where are we on the timeline?"
Those who understand that defense is a sector defined by necessity, patience, and industrial logic often discover that waiting itself can be the greatest advantage.
The writer is CEO of Nukkleus.