Ukraine Just Obsoleted Many Military Investments

On today’s show we are talking about how last week’s drone attack in Russia will forever change the way investments are made in military equipment and warfare in general. 

The economy in the US is being bolstered by a significant amount of defence spending. Europe is about to increase its defence spending on a large scale. The same can be said for Canada. 

Conventional warfare has been based on the premise that the biggest baddest army will overwhelm an enemy and crush any opposition. That notion got challenged in some of the most prominent writings including Sun Tzu who wrote “The Art of War” in the 6th Century BC. It was employed during the Byzantine Empire along its eastern front in the 8th and 10th centuries. 

Sure you can shoot a $1000 drone out of the sky with a million dollar Patriot missile. But is that an efficient defence against these new threats? 

Now this is a real estate show, not a military show. We’re here to talk about real estate. When we think of real estate investment one of the principles is that demand for real estate follows employment.

When we think of military industrial complex it conjures up images of companies like Lockheed Martin, Harris, Honeywell, Textron. These companies drive major employment. 

But increasingly the military industry is seeing a lot of new entrants. One of my business partners runs a incubator that is focused on the defence industry in Colorado Springs. This facility is conducting some of the most advanced research and development on new military systems. 

The speed and agility with which the Ukraine has modernized its underdog military is a lesson for countries looking to modernize their military. 

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Episode Transcript

(00:02):
Welcome to the Real Estate Espresso podcast, your morning
shot of what's new in the world of real estate investing.
I'm your host, Victor Monash. On today's show, we're talking
about how last week's drone attack in Russia will forever
change the way investments are made in military equipment and
warfare in general. But first.
At my development company, Y St.Capital, we currently have 8
buildings under construction in various communities around North

(00:24):
America. We have another 4 in the
pipeline for later this year. If you're looking to develop
anything, this might be an area where our team of experts might
be able to add value to your project in any one of a number
of different. Capacities, if you'd like.
To learn more about our consulting division, reach out
to me directly at [e-mail].
We'd be happy to examine your project and see if there's some

(00:45):
way we can help. On today's show, we're talking
about how last. Week's stunning drone.
Attack in Russia will forever change the face of warfare
worldwide. The economy in the US is being
bolstered by a significant amount of defense spending.
Europe is about to increase its defense spending on a large
scale. Same can be said for Canada.
Conventional warfare has been based on the premise that the

(01:07):
biggest, baddest army will overwhelm an enemy and crush any
opposition. Increasingly, warfare has become
asymmetric and the underdog has an upper hand.
This, of course, isn't new. It dates back to some of the
most prominent writings from SunTzu, who wrote.
In The Art of War in the 6th century BC.
It was also employed during the Byzantine Empire along its
Eastern Front in the 8th and 10th centuries, is employed in

(01:30):
the War of 1812 and then again during the American Civil War.
These are all examples of what is now considered asymmetric
warfare. Hit and run tactics involve
getting behind enemy lines, and they give the weaker force the
upper hand. What's the primary reason why
the US lost the Vietnam War? Now?
The notion of security is based on the premise that the enemy

(01:51):
wants to survive. The suicide bombers we've seen
over the last 30 years have challenged that notion as well.
Technologies like the Patriot missile and the Israeli Iron
Dome have become extremely effective against protecting
against missile attacks. But as we've seen in the past
week, and in fact throughout theentire war in the Ukraine, that
small commercial drones that cost under $1000 and take out

(02:13):
pieces of equipment costing millions of dollars.
Sure, you can shoot $1000 drone out of the sky with $1,000,000
Patriot missile, but is that an efficient use of resources
against these new threats? You can secure a city like
Washington DC or Moscow from threats that are visible on
radar from thousands of miles away.
But what about threats that fly below the radar from relatively

(02:34):
close range? By the time you have assets in
place to protect government officials, the battle's over.
The idea used to be that these small commercial drones were
radio controlled and required line of sight communications,
but that's no longer the case. These drones can be autonomous.
They can rely upon GPS signals for navigation.
They can now incorporate AI which makes them more adaptable

(02:57):
to changing battlefield conditions.
How do you protect against hundreds of autonomous AI
enabled drones that have the ability to learn and adapt to
defenses in real time? Now these drones are not
carrying two ton bombs. Some are a little more than a
hand grenade. A large bomb is required when
you can't determine the accuracyor when penetrating a
fortification is essential and we tend to think of military

(03:20):
investment in terms of huge programs like the F22 and the
F35 fighter, or the B2 bomber with its stealth radar signature
flying 35 hours non-stop with mid air refueling to reach its
target. How do you protect the visit of
a head of state in a foreign country?
Having spectators pass through ametal detector before attending
an event seems like a really feeble protection.

(03:43):
Now this is a real estate show, not a military show.
We're here to talk about real estate.
So when we think of real estate investment, one of the
principles is the demand for real estate follows employment.
And when we think of the military industrial complex, it
conjures up images of companies like Lockheed Martin, Harris,
Honeywell, Textron. These companies drive major
employment. And increasingly the military

(04:05):
industry is seeing a lot of new entrants.
One of my business partners runsan incubator that's focused on
the defense industry in ColoradoSprings.
This facility is conducting someof the most Advanced Research
and development on new military systems.
The speed and agility with whichthe Ukraine has modernized its
underdog military is a lesson for countries looking to

(04:26):
modernize their military. The technology's evolving
quickly, and we're seeing tests performed at Fort Carson in
Colorado Springs of new lightweight drones codenamed
Dragonfly. The notion that an F35B fighter
costing $109 million could be taken down by $1000 Drone should
be sobering to any military planner.

(04:46):
I can't tell you how the landscape will change precisely.
Will the world be buying fewer fighter jets and long range
bombers? My instincts are telling me the
answer is yes. Will the world be buying fewer
heavily armored tanks that weigh73 tons each?
Will the world be buying less artillery?
Again, I think the answer is yes.
Now I don't have any proof of that, but my gut is telling me

(05:07):
that the landscape has changed and the employment patterns
associated with modern military industrial complex are changing
with it. So if you're building an
apartment complex that's next to100 year old factory that makes
40mm shell casings, maybe that employment pattern will change.
If you're worried about a pilot being killed in an aircraft and
put the pilot a few 1000 miles away from the aircraft, science

(05:28):
fiction movie of robots fightingrobots is inching closer to
reality every day. As you think about that, have an
awesome rest of your day. Go make some great things
happen. We'll talk to you again
tomorrow.