After narrowly averting a shutdown this week, many are asking, "How many times has the government shut down?"
The answer is 18 times, and the history of shutdowns is interesting. The current laws mandating that Congress must pass a budget or spending bill to prevent a shutdown were enacted in 1976. So there weren't any shutdowns before that time.
When a budget or spending bill is not passed, there is a "funding gap" that shuts the government down. (You can read the full explanation here.)
While the "funding gap" is the official reason for the shutdown, the reasons for these gaps have varied over the years.
Must See: This Great Depression-Era "Secret" Helped Transform Two Teachers into Millionaires. Read more...
It is also interesting to note that the number of shutdowns has slowed considerably despite being in the news most years leading up to the budget deadline of Sept. 30.
Below is a chart of all of the reasons the government has shut down, plus an investing strategy for the fall, just in case a budget isn't agreed upon...
Profiting from a Government Shutdown
[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]
Money Morning Chief Investment Strategist Keith Fitz-Gerald has pointed out that even though a shutdown is expensive and embarrassing for the country, it does create some profit opportunities.
First, he recommends placing "lowball orders" for companies you'd like to buy. Pick a price way below where those stocks are trading now. That's the "lowball" price. Place an order that gives the stock, the number of shares you want to buy, and the price at which you want to buy them.
If the market plunges because investors panic about a government shutdown, the market drop may bring the shares of those companies to your lowball level.
For the best performance possible, Fitz-Gerald recommends investing in his six "Unstoppable Trends."
Fitz-Gerald pinpoints his six Unstoppable Trends as long-term trends that political shenanigans and world events can't derail. The best one to target during a government shutdown is his trend of "War, Terrorism, and Ugliness," which targets defense stocks. (The other five are Medicine, Technology, Demographics, Scarcity/Allocation, and Energy.)
Because defense stocks in particular depend on government funding, they tend to get hit the hardest during a shutdown. But the sector comes back quickly after the government reopens and is also under the umbrella of War, Terrorism, and Ugliness, making these stocks good investments.
During the last government shutdown (2013), defense stocks fell 7%, more than the DJIA. But their great fundamentals were the same. If they fall this time, remember that the underlying fundamentals are still the same.
Fitz-Gerald recommends two defense stocks as excellent candidates for lowball orders. They are Lockheed Martin Corp. (NYSE: LMT) and Raytheon Co. (NYSE: RTN).
Lockheed Martin is a global leader in security, defense, and aerospace. Given the unrest around the world, its expertise and products will be in demand whether the government shuts down or not.
So far in 2017, LMT has risen more than 10%, twice the DJIA's advance.
RTN is another global defense giant. In fact, it made the missiles the United States fired on Syria in early April. So far this year, it is up nearly 10%, slightly less than twice the DJIA's climb on the year.
While War, Terrorism, and Ugliness is not the best recipe for the world, the trend will survive any government shutdown. And the defense companies will weather any storm brewed in Washington.
Must See: What do billionaires Peter Lynch, President Trump, and a retired cop from Northridge have in common? They've all benefited enormously from a curious Great Depression-era "program." And even though most have no idea this exists, it could be worth $68,870 or more to the average American. Continue reading...
Follow Money Morning on Twitter @moneymorning, Facebook, and LinkedIn.