This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Make Money on the New Mercenary Army

Editor's Note: Jon D. Markman writes a weekly column for CNBC on MSN Money that is republished here on TheStreet.com.


Considering all the flak that President Bush has endured for ordering 20,000 more troops to Baghdad, it's a wonder that he didn't just pick up the phone and dial 1-800-MERCENARY.

That's what the Pentagon is likely to do anyway, as it has throughout the Iraq conflict. Thanks to loopholes in the law and budgeting process, upward of 20,000 private military contractors -- sadly, the term mercenary is passe -- are believed to be at work for the U.S. in the region, and their ranks are growing all the time.

We've outsourced airliner and parka manufacturing to foreigners, after all. Why not the messy job of fighting, not to mention translating and spying? Independent companies are now the third-largest contributor of forces to Iraq, after regular American and British troops.

This has meant big bucks for a handful of little-known companies with Defense Department contracts. The most well-known of the bunch is privately held Blackwater USA, a secretive outfit run by a former Navy Seal that hires commandos from as far away as Chile, Bosnia and the Philippines to fight our wars and protect our diplomats. When four of its men lost their lives in an unusually savage attack in the Sunni stronghold of Fallujah three years ago, a spotlight was cast on the nasty business of private security forces. But since then, the attention has receded, and these companies' influence has grown.

Outsourced War

As the number of U.S. military personnel has fallen to around 1.5 million lately from around 3 million in 1970, the amount of money spent by the Pentagon on military operations has risen at a 6% annual rate from less than $50 billion to a bit more than $150 billion, adjusted for inflation. Much of the differential is being spent on outsourced services, and that is why independent personnel contractors -- a handful of which are public -- have become more important than ever.

1 of 5

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,943.81 +28.74 0.17%
S&P 500 1,967.57 +2.89 0.15%
NASDAQ 4,415.49 +19.2860 0.44%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs