The Single Biggest Lesson Learned From Russia's Ukraine Invasion

Last week, the Biden administration sent another $400 million in defense aid to Ukraine. 

It was the 15th such package and brought the total level of humanitarian and military aid to $7 billion since the war began in February.

The package included heavy artillery, including howitzers and High Mobility Artillery Rocket Systems (HIMARS), which have been crucial to slowing Russia’s progress in the eastern part of the country. 

More will undoubtedly follow. 

There's no question this war has been illuminating. It's a rare (if tragic) opportunity for the United States and Europe to gauge the military effectiveness and vulnerabilities of a near-peer rival. 

We’ve learned a lot about Russia’s military — and in all candor, most of it has been pleasantly surprising. 

It turns out Russia’s best weapons aren’t as advanced as we feared. 

Its intelligence apparatus was an embarrassment from the start — badly misinformed and easily penetrated.

Its bureaucracy has been a hindrance, stalling its war effort with poor communication, bad analysis, insufficient planning, and inadequate strategy. 

Those are all good things.

But in spite of all these failures and disappointments, Vladimir Putin hasn’t been deterred. 

Russia is instead making plans to quickly annex the territory it’s won. And Ukraine and the West are gearing up for a long, grinding slog. Hence the latest aid package.

And so, amid all this, another key lesson has emerged for the defense community…

You can never have too much ammunition. 

“That’s what Ukraine has proved,” says Wes Kremer, president of Raytheon Missiles & Defense. “It really is important not only to have that deterrence capability but to be able to have enough quantities. Because as we saw, stores get depleted very quickly.”

Now, that’s obviously a conclusion you might expect a missile manufacturer to draw from this, but he’s not wrong. 

Stingers, Javelins, and HIMARS have been absolutely vital in repelling the Russian invasion. 

And Ukrainian forces are burning through them so quickly they’ve been begging for more. 

“Russia's army is more powerful, they have a lot of artillery and ammo. For now, this is a war of artillery... and we are out of ammo,” Vitaliy Kim, governor of the country’s Mykolaiv region, pleaded last month. “The help of Europe and America is very, very important.”

The pleas have obviously been heard, and the U.S. has been responding as best it can. But that’s resulted in a massive drawdown of our own stockpiles.

The Defense Department has sent 7,000 Javelin anti-tank missiles and 2,000 Stinger anti-aircraft missiles to Ukraine. That’s about a third of our total Javelin supply and a quarter of our Stingers.

Those will have to be backfilled, a necessity that is already being addressed with a massive $850 billion-plus defense budget that’s working its way through Congress as we speak. 

We’ll probably hit $1 trillion in the next few years.

Our NATO allies are ramping up their defense spending as well.

Some 29 European states have pledged more than a combined $209 billion in new defense funding since February. And that’s just to start. 

All of these countries, plus Japan, Australia, and Canada, have all raised their outlays for future defense spending. 

There’s no shortage of equipment to stock up on, but again, missiles will be at the forefront.

Lockheed Martin (NYSE: LMT) is already ramping up production of the Javelin from 2,100 a year to 4,000 missiles a year. And Raytheon (NYSE: RTX) will have to restart production of the Stinger, which it abandoned in 2020. 

Harpoon and Tomahawk missiles are in demand as well, as is demand for missile defense systems like the Terminal High Altitude Area Defense (THAAD); Patriot missile defense systems are on the rise too.

Thus, the global rocket and missile industry, which generated $58 billion in 2021, is expected to reach $74 billion by 2026 and  $82 billion by 2031.

Of course, this isn’t a surprise. I’ve been talking about the big missile boom for years.

I even just launched a trading service that’s focused exclusively on military technology — particularly military technology that’s bleeding into the private sector.

It's called Secret Stock Files, and I send out monthly video recommendations discussing all of these technologies and more. You can find out more about that here.

You can also catch me discussing all things military on the Angel Publishing YouTube channel, including this podcast I recently joined. 

Fight on,

Jason Simpkins

@OCSimpkins on Twitter

Jason Simpkins is Assistant Managing Editor of the Outsider Club and Investment Director of Wall Street's Proving Ground, a financial advisory focused on security companies and defense contractors. For more on Jason, check out his editor's page. 

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