OVERVIEW: A World in Turmoil
Since the tragic events of 9/11, terrorism and the efforts to prevent its recurrence have been a persistent part of American life. Whether enduring long lines at airport security or seeing reports of combat casualties, the ongoing war on terror has remained largely front of mind. While this effort has kept terrorists at bay in the U.S., the global threat has not subsided. With rogue nations like Iran and Syria continuing to foment unrest, the threats are as real as ever.
THE THREAT: State Sponsors of Terror
In addition to ongoing military action in Iraq and Afghanistan, the worldwide effort to root out terrorism continues. In particular, the U.S. State Department periodically designates countries as “State Sponsors of Terrorism.”
Iran, Syria, and Sudan earned this designation through activities ranging from harboring terrorist organizations like al-Qaeda to pursuing the development of nuclear weapons. Despite this designation, many global publicly-traded companies persist in doing business in these countries.
THE INFECTION: A Deadly Strain
More than 10% of the S&P 500’s market capitalization (approx. $1.4 trillion) is considered infected by association with these State Sponsors of Terrorism.
Despite awareness of the negative impact, 33 infected companies, in 8 of 10 sectors in the S&P 500, and 697 public companies around the world persist in doing business in nations that sponsor terror-related activities.
The total market capitalization of companies doing business in terror-sponsoring states has been growing by 25.9% annually since 2003, the date when data became available on these public companies.
THE CONNECTION: Tainted Assets
We believe investors with infected companies in their portfolio have a triple threat on their hands because they could be:
- Providing support to terror-sponsoring nations and their economies
- Providing support to terrorists via the governments that support it
- Risking sudden, significant loss of value to sanctions, war or other action
Bottomline: We feel the dollars and resources that infected companies contribute to the economies of rogue nations flow, directly or indirectly, into the hands of terrorists who are known to be responsible for killing American troops.
Infected: An infected company or investment is one in which our independent research provider has identified as having an active, non-humanitarian business interest in a nation defined by the United States Department of State as a State Sponsor of Terrorism.
Tainted Assets - A tainted asset is defined as the assets of an infected company.
Source: IW Financial
Disclosures: There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.