Our inaugural concept of the year draws inspiration from the NFL clash between the Chiefs and Raiders, held on Christmas day. Termed "Defense AS Offense," this innovative idea seeks to reimagine the conventional roles of defensive strategies in a distinctive and creative fashion.

In the lead-up to the Week 16 matchup, the Las Vegas Raiders (6-8) found themselves pitted against the formidable Kansas City Chiefs (9-5). Widely anticipated as a victory for Mahomes and the Chiefs, echoed by fervent fans, NFL commentators, and analysts, the game unfolded with unexpected twists. Despite the prevailing sentiment of an 'easy win,' the Raiders had divergent intentions.

Just moments before halftime, a strategic maneuver by the Chiefs, positioning Mahomes at RB alongside Pacheco for a shotgun snap, unraveled disastrously. A mishandled exchange led to a fumble within their own 10-yard line, Raiders' defensive tackle Bilal Nichols #91 retrieved the ball and executed a 'scoop and score,' propelling the Raiders to a 9-7 lead. In a mere seven seconds, Mahomes and his team returned to the field for their ensuing possession, only to be met with a resounding setback. A decisive interception by Raiders' Jack Jones #18 swiftly transformed into a touchdown, exacerbating the Chiefs' predicament.

Despite a hiccup in the Raiders' extra-point attempt following Nichols' touchdown, they astutely opted for and executed a two-point conversion, effectively amassing 14 points attributed to their exceptional defensive prowess. In a game devoid of offensive touchdowns, the Raiders clinched victory with a final score of 20-17, etching a remarkable triumph marked by unconventional defensive achievements.

Defense AS Offense

1. Aerospace & Defense

In 2022, President Biden enacted pivotal legislative measures, including the CHIPS and Science Act [52.7B] and the Inflation Reduction Act (IRA) [~900B+]. The strategic allocation of these substantial funds played a crucial role in fostering innovation and propelling the Semiconductors sector, evident in the remarkable gains of the SOXX ETF (+71%) and SMH ETF (+77%) in 2023.

Recent developments include President Biden's approval of the National Defense Authorization Act, earmarked at an estimated ~880B+ for fiscal year 2024. Considering the momentum generated by the CHIPS and IRA bills in the Semiconductor investment domain, it is reasonable to anticipate a positive impact on the share prices of companies within the defense and aerospace sectors, given the magnitude of this nearly 900-billion-dollar allocation.

Against the backdrop of ongoing conflicts in Ukraine and Israel, heightened global tensions underscore the imperative for the United States to remain vigilant against potential future threats. The specter of a potential Chinese invasion of Taiwan further emphasizes the necessity for a robust military preparedness. Having depleted military resources over two decades of Middle East conflicts, Bankfluence posits that regardless of the 2024 election outcome, both right and left-leaning perspectives acknowledge the urgent need for innovation and replenishment across all branches of the U.S. military to uphold its status as the preeminent global military force.

Resistance to the concept that "investing in Defense and Aerospace (D&A) stocks" implies endorsement of war exists. Nonetheless, Bankfluence contends that this perspective runs counter to the appropriate mindset for investors. It is essential for individuals residing in the United States to recognize that our historical investments in Defense and Aerospace have played a pivotal role in maintaining peace on our soil since 1865. While incidents of attacks on U.S. territory have occurred, the contiguous United States has been blessed with 158 years of uninterrupted peace within its borders, underscoring the significance of strategic investments in D&A sectors.

2. Healthcare

The emergence of a contrarian perspective constitutes the second thematic inclination we anticipate. This insight draws inspiration from the remarkable performance exhibited by homebuilders in the year 2023. In our extensive journey through the realms of investment literature, encompassing books, articles, and analytical pieces, we observed a consistent narrative cautioning against investing in homebuilders when interest rates ascend. This prevailing wisdom echoed throughout financial literature, presenting a seemingly unanimous stance. However, what became strikingly apparent was the ultimate consequence of adhering to this conventional logic – a missed opportunity for many, Bankfluence included, to partake in the outstanding performance demonstrated by the homebuilders.

1-Year Performance Homebuilder ETFs:

-iShares U.S Home Construction ($ITB) - 67.86%

-SPDR Homebuilders ($XHB) - 58.59%

-Invesco Building & Construction ($PKB) - 54.67%

1-Year Performance Individual Stocks:

-Lennar Corporation ($LEN) - 64.69%

-D.R. Horton, Inc ($DHI) - 70.5%

-Toll Brothers, Inc ($TOL) - 105.91%

Traditional wisdom posits that investing in the healthcare sector during election years is fraught with risk or considered imprudent. The surge in volatility, spurred by election rhetoric and debates, often revolves around sensitive subjects like future drug prices, healthcare policies, and budget allocations for Medicare & Medicaid. The prevailing 'uncertainty' concerning the new regime's stance on the sector typically dissuades conventional investors. However, our perspective diverges. We assert that this very uncertainty presents a compelling rationale for amplifying exposure in the 2024 investing year. The metaphorical 'wall of worry' appears ripe for ascent, representing an opportune moment to navigate and capitalize on potential market dynamics.

Throughout the year, we anticipate the emergence of multiple dominant themes. However, given the current landscape where technology, semiconductors, and software companies are stretching the limits of multiples, the strategic playbook of 'defense as offense' stands out as particularly compelling for the first half of 2024.

While it's only been two days into the 2024 investing year, the defensive trade has exhibited notable outperformance. We intend to unveil additional investment ideas for 2024 in due course, but the concept of "defense as offense" currently stands as our highest conviction strategy. As we garner deeper insights into future Federal Reserve policies, geopolitical narratives, and U.S. economic data, we will progressively disclose our perspectives on optimal positioning.

We extend our gratitude to all who have joined us on this journey, and we approach the prospects of 2024 with unwavering optimism. Our commitment is to maintain transparency, expand our readership and subscribership, and offer valuable insights and opinions catering to both short-term and long-term investing communities. As we set ambitious goals for Bankfluence, we are dedicated to implementing these ideas throughout the year.

Best wishes to all, and may 2024 prove to be a year of mental, physical, and emotional well-being for each and every one.