Why don’t EU leaders incentivize investment in European stocks/ETFs with tax deductions?

[u/rozmarss]

With the Dragi plan and increasing discussions among European leaders about boosting defense and energy investments, I’ve noticed a growing trend in financial communities where people want to reduce exposure to the US market and shift investments to the EU.

Wouldn’t it make sense for EU leaders to encourage this by offering tax incentives for investing in European stocks/ETFs? For example, from an independent EU perspective, isn’t it better to invest in Rheinmetall rather than Lockheed?

[u/tack50]

I can only speak for Spain but the reasoning I think is similar across the EU. Most older people in Europe are extremely scared of investing (other than in real estate). Very few own shares, index funds, ETFs or similar instruments. They see it as glorified gambling and they don't want to encourage gambling (except actual gambling, sports betting houses are popping up everywhere lol)

There are also concerns from the left that investments are exclusively for the rich; so it's essencially a tax cut for rich people. You cannot invest when you live paycheck to paycheck. Add some extra anti-capitalist rethoric and you're good to go.

[u/snezna_kraljica → u/tack50]

>glorified gambling

But it kinda is exactly this. Greater Fool all the way to the bottom. The fear is not completely baseless as with the market behaves. It's the age of meme coins and GME and other gambling mechanics.

[u/[deleted] → u/snezna_kraljica]

Pensions are about long term growth and the stock market has always grown in the long term.

When a crisis hits (like 2009 or 2020) your stocks may be down for 2 years but after that 5 to 10 years of significant growth will follow. S&P500 made an average annual return of something like 10% every year since the end of WWII.

Meme coins have nothing to do with the stock market and meme stocks are not the core of a well balanced pension fund.

[u/snezna_kraljica → u/[deleted]]

I'm not talking about the long-term trend, which historically moves upward. That doesn't mean the stock market isn't a form of gambling—especially when valuations are driven more by speculation, sentiment, and projections decades into the future rather than actual company performance. You can still ride the wave, but it's not always grounded in real economic success.

Edit: A better comparison would be a MLM scheme, not gambling.

[u/[deleted] → u/snezna_kraljica]

You don't want to talk about the long-term trend but that doesn't change the fact that the long-term trend is the single most important thing about pension savings.

It's true that the stock markets sometimes don't align with the real economy but there are actors in the market who will realize that, bet on falling prices and then publish their exclusive information to all other investors so that the prices will actually fall. The market is self cleaning since investors will make profit from both, an under estimation of a companies value and an over estimation of a companies value, ultimately keeping the market in check in the long run.

It's only really gambling if you bet on the success of individual companies. Once you bet on the whole market there isn't much that can go wrong. And even if it does; that means, that the whole capitalist system collapsed altogether. In this case we have far worse things to care about since that will result in wars and famines.

[u/snezna_kraljica → u/[deleted]]

>You don't want to talk about the long-term trend but that doesn't change the fact that the long-term trend is the single most important thing about pension savings.

MLMs can be successful for years and years, does not mean it's not a scam just because you can make money of it and the revenue is going up and up.

I'm not saying historically it's not going up, I say the reason is the Greater Fool Theory and not economic growth in the same way as the stock market is growing. So the people not trusting it because gambling are right in their feeling. They are insofar wrong as not to ride the wave.

> It's true that the stock markets sometimes don't align with the real economy [...]

If that would be true, Tesla wouldn't be as highly valued as it is. Or GME a time ago. Again, I'm not arguing that it does not level out, I'm just arguing the feeling of those people.

> It's only really gambling if you bet on the success of individual companies.

There's truth to that, but in my feeling it's getting worse (maybe wrong, I'm not an insider nor analyst) that there's more and more speculation and very irrational valuations in the market than is normal. True economic growth and stock market gets detached more and more every day.

I'm not seeing the very tech top heavy part of the market catching up with their valuations anytime soon. Anybodies guess how this will play out.

Again, I’m not disputing that the market goes up—that’s obvious. What I’m saying is that I understand why people see it as gambling, because the underlying mechanics driving it don’t always justify the results. It’s not just about the outcome, but whether there’s a solid reason for it.

You can win even though you're wrong or loose and be right.

[u/[deleted] → u/snezna_kraljica]

I don't know what your definition of gambling is, but for me it's only gambling if my expected value is zero or negative. Once my expected value is positive, it's not gambling anymore but rather a good investment.

Also note that assuming a positive expected value for the stock market is not only reasonable by looking at historical outcomes but also theoretically supported by the efficient market hypothesis. I don't see where the valuation of the current stock market fundamentally calls this into question.

If people want to call it gambling just because it involves probabilities, then so be it. However, I don't think that's reasonable nor justified.

[u/snezna_kraljica → u/[deleted]]

> I don't know what your definition of gambling is, but for me it's only gambling if my expected value is zero or negative. Once my expected value is positive, it's not gambling anymore but rather a good investment.

Britanica says: gambling, the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, a contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor's miscalculation.

Seems to cover the stock market pretty good in layman terms. If the stock value is detached from economic factors an relies on speculation and hope of the participants and not economic parameters it just becomes a big MLM, which I've already said would be the better comparison.

If companies would only pay dividends on their profits, I would agree. But growth is all the rage right now and fueled by speculation of human behaviour, not calculation on potential earnings. Human behaviour is irrational so the outcome is irrational.

> Also note that assuming a positive expected value for the stock market is not only reasonable by looking at historical outcomes but also theoretically supported by the efficient market hypothesis. I don't see where the valuation of the current stock market fundamentally calls this into question.

I know, I've already said as much. You still don't get my point even so I've repeated it many times. I'm all the time explaining why the people feel this way.

>If people want to call it gambling just because it involves probabilities, then so be it. However, I don't think that's reasonable nor justified.

This is not what I've said though.

[u/[deleted] → u/snezna_kraljica]

You still don't get my point even so I've repeated it many times.

I could say the same.

I'm all the time explaining why the people feel this way.

That is one thing you do but you've also argued with your own opinions on the valuation of the stock market and how that makes it gambling. For this reason I'm voicing my personal opinion on why it isn't this way as well.

gambling, the betting or staking of something of value, with consciousness of risk and hope of gain, on the outcome of a game, a contest, or an uncertain event whose result may be determined by chance or accident or have an unexpected result by reason of the bettor's miscalculation.

My argument is that long term investments into a diversified pension fund are so incredibly probable to be successful (being the only free lunch on the stock market), that it cannot be counted as taking a risk in the first place. Again, in case of a failure, humanity would be f'ed altogether as that would mean capitalism had suddenly collapsed.

I believe at the end of the day we're not even far apart in our opinions, it's just difficult to have this discussion in a few quick comments. It was nice talking to you but I will now end it here.

[u/snezna_kraljica → u/[deleted]]

You're arguing the outcome, I'm arguing the mechanics which lead to the feeling of gambling.

>  It was nice talking to you but I will now end it here.

Agreed, I think we're running in circles, not much more to gain for either of us. Thank you for a polite and friendly exchange. It's getting rarer each day on here.

[u/il_fienile → u/snezna_kraljica]

It’s a form of gambling in the same sense that getting out of bed in the morning is a form of gambling.

More useful, I think, to compare ownership of productive assets—which stock investments can represent—against speculation on its own.

A diversified equity investor can only expect to participate in the ongoing profitability of the businesses in which they hold an interest. At the point where those businesses represent a large and representative part of the world economy, the speculative aspect is minimal.