The Super Obvious Fiscal Cliff defence Bet Ended Up Being Totally Wrong

So much for that idea. One theory we’d heard a few times was that the defence stocks would get slammed if there were no Fiscal Cliff deal, since the spending “sequestration” caps defence spending below where the industry and many in government would like it.

But no dice. There’s just a few days until the Fiscal Cliff is “hit” and defence stocks (as measured by the ITA ETF) are near their highs of the year.

ITA ETF

Photo: Bloomberg

It’s possible that the market is still mostly pricing in a deal, but you’d think it would at least be an undeperformer, given the wave of pessimism. Bigger point: Obvious ideas frequently won’t end up working how you suspect.

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.