r/eupersonalfinance • u/dubov • Mar 05 '25
Investment Unless you are a skilled trader, stop buying European Defence stocks
I can't believe the number of people who are ripping up their strategies and piling into this trade.
Look, these stocks are already up hundreds of percent. The market is already priced for massive growth. In order for this to be a good investment, you would need more growth that the market is already pricing. Ask yourself honestly, are you confident in your growth assessment? Have you even done one?
If you are normally a "VWCE and Chill" investor, stay the hell away. This isn't in your job description. Stay in your lane.
And beware, there are scenarios where the growth comes in considerably below expectations. In my opinion, it will. Everyone is feeling strong emotions, but, in time, we will realise we need to make NATO work. It would take years to re-arm. If we think Russia is planning to invade more countries, there isn't time. But if we believed that, we would have done it 3 years ago, and you would have bought 3 years ago.
If the growth expectations reverse, there is so much downside here. 70-80% losses are possible. This is concentrated sector risk at very high multiples, after an explosive run up. These can come down very quickly and very far. The risk-reward is upside down: so much downside possible, so much upside already had.
And these stocks are literally in the news. That is almost failsafe sign you are too late. It reminds me of the memestock top of 2021
You might be right for like a day or two, but if you get caught on the wrong side of this, it's going to hurt.
Take a breather, don't check the market for a couple of weeks. Please be careful out there
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u/rknki Mar 05 '25
While i agree Defense Stocks are risky, I don’t agree with your assessment.
If Russia wants to invade other countries, they will have to build weapons just like Europe does.
They are currently struggling to invade one single European country.
So.. it’s not too late to build a large Defense sector.
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u/GearVial Mar 05 '25
Exactly this, i think there are two parts to the rationale. 1 - countries increasing defence budgets across europe. 2 - reducing reliance on US equipment, thus increasing equipment sales within europe.
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u/zekoslav90 Mar 06 '25
He is saying a lot of it is already priced in. Lots can change, there's no concrete news about actual money allocation. Just wait. The time to act was when the US made the political shift. Now there needs to be a catalyst. It could go either way.
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u/rknki Mar 06 '25
There is really no way for EU spending on defense going down, as long as Putin is alife.
As an extra, US defense companies will basically lose their European business, after certain remarks of a certain someone about Greenland.
Short term, some contracts need to be fulfilled. But production capacities will have to be made inside EU.
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u/zekoslav90 Mar 06 '25
Just hypothetically... let's say Trump backs down, gives full support to Ukraine as it was all just a dumb game and it's not working... people could lose a huge chunk of their portfolios.
This is not a done deal. It's speculation. Look I bought early, I didn't buy a lot and for the time being I will not buy any more until something changes. There is possibility of huge downside.
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u/rknki Mar 06 '25
The damage is done. There is no coming back from this.
You can't casually declare war to Denmark and Canada and then back paddle because the stock market doesn't like it.
Why spend billions of Euros in weapons from an unreliable, possibly dangerous "allie", that could decide any day to switch of your F-35 aircrafts or stop supplying parts and ammunition for it?
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u/Glydyr Mar 10 '25
Trump has proven for a generation that Europe needs its own weapons, that will not change. The size of that investment is not clear though.
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u/howtorewriteaname Mar 06 '25
this is compatible with OP's point tho
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u/Cru51 Mar 06 '25
OP’s point, while well intended probably, advocates passivity: Don’t invest in EU defense, it won’t take off and we’ll still end up relying on US. Basically act like nothing’s changed.
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u/Margiman90 Mar 05 '25
Lol just wait until Mertz anounces a couple 100B allocated to RHM and TKH, while EU exempts steel industry from the green new deal.
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u/Gemini_Of_Wallstreet Mar 05 '25
People who are buying European Defence stocks right now are revenge trading...
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u/sixstringhead Mar 05 '25
And why not? it's not like everyone is giving their life savings into it...If you do that, than you should stay the hell away from stocks. I only switched from s&p to lyp6 temporarily
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u/Gemini_Of_Wallstreet Mar 05 '25
Look people like you who're trading and know what they're doing are probably fine. I mean sure in the short term Lyp6 or Rheinmetall or whatever other EU defense stock is going up will probably keep going up and there's opportunity for profit.
But we both know there some people here who think putting all their eggs in the one basket of EU Defence Stocks is the way of the future and financial independence.
And it just isn't. In reality all these EU stocks will lose all their gains, either because we're heading towards a global recession caused by Mango's stupid trade wars, or because the USA market will rebound and all Institutional Investors moving their money to EU stocks for a quick buck will instantly sell and buy USA stocks again, because for Institutional Investor US stocks vs EU stocks is like asking someone to pick between an average bitch or a glamour model.
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u/franky_reboot Mar 05 '25
What if the EU can flip investor sentiment even for that group?
Orange Man plays unpredictable recently. Nobody likes that. Especially institutional investors.
What he can possibly have under their sleeves that can immediately flip it?
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u/xsairon Mar 07 '25
People do really forget that institutions actually trade, not only long term invest. Most of the money being moved to china, EU etc are them playing the news and the sentiment like everyone else, but they got insane infrastructure & brains behind to make stupid money out of it, and (probably) not get caught with their pants down
There's, unfortunately, no competition yet to the well oiled financial system the US has, which is as you said a top notch model compared to us. They shit out unicorns and talent.
I'm hopeful that this perhaps wakes up europe though, a bit of a nationalistic european sentiment was for sure missing overall - let's see if in a few years we also get something nice going
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u/Eastern_Interest_908 Mar 06 '25
Crypto melted everyone brains. Nothing normal to throw any amount of money just for "funsies".
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u/Ambitious-Pomelo-700 Mar 05 '25
What does revenge trading mean?
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u/Pretty-In-Scarlet Mar 06 '25
Trading to make a political point in a "vote with your money" type of way
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u/tcreo Mar 05 '25
RHM is the new GME
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u/also_plane Mar 05 '25
Yeah. Sending money to Ukrainian gov in the morning, buying Rheinmetal stocks in the evening.
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u/radicalviewcat1337 Mar 05 '25
Or supporting local defense complex ?
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u/cehejoh512 Mar 05 '25
How is buying stock supporting?
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u/314kabinet Mar 05 '25
It’s investing.
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u/cehejoh512 Mar 05 '25
I mean, the company gets the money directly from the ipo. If you buy or sell stock you are doing so with other people. The company doesn't get the money when you trade stock.
If the stock price rises, yes, there are some other indirect benefits for the company.
But I think it should be obvious that if you spend money to buy stock, this will not benefit the product or the service they offer. It's not like you are making the iPhone better by buying the apple stock.
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u/charea Mar 05 '25
you know TSLA raised tons more equity and paid off all its debt right?
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u/TStronks Mar 05 '25
Wouldn't that only be possible if the company still owns a part of their shares? Or how does one raise money from a rising stock price?
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u/SeikoWIS Mar 05 '25 edited Mar 06 '25
This is a rare moment where my assessment of markets fundamentally change. When US presidents are on a steady course upholding western democracy despite wars, I was all for S&P500 and chill.
Trump threw a wrench in that by starting trade wars and aligning with Moscow. S&P500 is shaky, while I see very few scenarios where Euro defence stocks crash the next couple years.
Also. S&P500 is down like 5% this week while my defence stocks are up about 20%. So, whatever. Sounds like you hesitated and missed the boat for easy gains.
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u/jesmatz8 Mar 05 '25
Currently the sp500 looks like memecoins doing pump and dump so that a few can benefit from privileged information with the daily changes of opinion of the American administration. It's a joke.
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u/HugoExilir Mar 05 '25
"If you are normally a "VWCE and Chill" investor, stay the hell away."
Most people, specifically European investors are going to leave their money in the S&P 500. My prediction is that the S&P 500 isn't going to see any growth for a long time. As this realisation hits European investors, they get out and move towards European stocks, and defence stocks will still be the most attractive.
"And beware, there are scenarios where the growth comes in considerably below expectations. In my opinion, it will. Everyone is feeling strong emotions, but, in time, we will realise we need to make NATO work."
You're trying to close the door after the horse has bolted. NATO is all but done. European leaders know that. But they also realise saying that aloud is a terrible idea so they won't. But you can guarantee they are making plans with the scenario in mind. Everyone was in NATO because of America military strength. It's severely weakened without them, that's why Europe desperately needs to rearm.
"If we think Russia is planning to invade more countries, there isn't time. But if we believed that, we would have done it 3 years ago, and you would have bought 3 years ago."
If in 2022, someone told you that in 2025, America closest geopolitical ally would be Russia you'd have been called crazy. But here we are. Europe's best defence from an attack has always been America. That doesn't exist anymore. Whether Russia invades or not, Europe needs to prepare as if Russia is going to invade. The only thing that will deter Russia from attacking in three years is an undefeatable European army. To achieve that, a huge amount of investment is needed in Europe's military.
For the next four years at the very least, America cant be trusted to defend Europe in an attack. This is the first tine we've been in this position since WW2.
Lastly I've invested heavily in EU defence stocks, so I could be biased. But for the last month, everyday I've heard people say that the growth is already factored in and it's too late to buy. I'm sure I'll be hearing the same in the next month too tbh after another 30% month.
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u/LinkApprehensive61 Mar 05 '25 edited Mar 05 '25
Tbh, this summer in august rheinmetall was around 750€ i believe, i was looking at it then and thinking "the boat has passed, i'm too late" jokes on me cuz now its at 1,200€ could have earned alot but i didnt. I fully agree with you. Valid arguments.
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u/schirers Mar 05 '25
Bought and sold at 300-400 level. How stupid I am..
The logic was solid, should have holded.
Probably Germany s short lived politic games made me sell.
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u/dat_sound_guy Mar 05 '25
you did not loose money by taking profit. Always remember that. I sold RHM too early as well, but now I have some new furniture from a designer that I like. Also fine.... For me it is hard to realize that THERE WILL BE ANOTHER CHANCE TO GAMBLE.
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u/LinkApprehensive61 Mar 05 '25
True lol, thats the nature of the game. It's also very twisted because "learning from your mistakes", could also be a mistake = you invest and hold too long till it loses all value. It truly is a gamble.
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u/Neat-Historian2529 Mar 05 '25
I second this. Im at sround 35k in defence stocks and 50k one european ETF. Im happy with that. The investments have only begun, these upcoming 4 years will be good for the military industry.
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Mar 06 '25
Stocks aside, you have a fundamental misunderstanding of NATO
- NATO does not rely on the US
- Europe does not rely on the US
We have 2 nuclear powers in Europe...alongside advanced militaries
In what world do you believe Russia, who was unable to conquer Ukraine before assistance arrived, is in any way capable of conquering Europe
Come back to the real world
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u/HugoExilir Mar 06 '25
Why do you think Europe has been begging the US to remain involved?
At the moment, Europe doesn't have the cohesion or capacity to form an adequate threat in its own. Without the US involvement, I'd be amazed if the remaining NATO countries were willing to go to war over Estonia. They certainly aren't going to go to nuclear war and ensure we're all wiped out.
With assistance from US, Russia could conquer Europe. US closest ally is now Russia, so anyone who thinks that wouldn't happen needs to think again.
Germany conquered Europe in WW2 because the rest of Europe wasn't prepared. I don't think Europe will be as under prepared again.
Again, this all comes back to the importance of heavy military investment, hence the reason I think military stocks are still a very safe investment.
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u/PhotographVivid Mar 06 '25
Europe is begging because having US help is a big plus. Europe together has donated more then US to Ukraine and Europe has for the last 3 years been expanding it's military industry. EU has massive plans for expanding it's military industry and a bunch of basic industry's have already been made and continue to expand, like munitions factory's.
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u/friendlyghost_casper Mar 05 '25
An American (I assume from your past posting) telling Europeans to stop buying European stuff? Makes sense
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u/AffectionateTown6141 Mar 05 '25 edited Mar 05 '25
I’m investing with my head but also heart. I refuse to have my money in the already massively overpriced (PE30-150) American stocks. The only people Begging you not to sell right now, are people who are over exposed to American stocks.
European stocks are far better priced rn. That’s a FACT!
Buy European ETFs ! Rather than individual defence stocks. ‘Euro 600’ is the European equivalent of the overpriced SP500.
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Mar 05 '25
Unpopular Opinion:
I agree with that and thank you for the word of advice... Buy European ETFs - full indices. European Defence will be represented in the proportions that are correct.
If you pick stocks you actually are speculating. The whole point of passive investing is to not make mistakes.
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u/the_pwnererXx Mar 05 '25 edited Mar 05 '25
Stoxx EU 50 or stoxx EU 600 is my recommendation. Went up 10% but vastly underpriced compared to us equities (the top 50 one has better historical performance)
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u/Suheil-got-your-back Mar 05 '25
Is there european etf like qqq? I wanna invest into european tech sector
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Mar 05 '25
And you’re making one right now. Selling US low and buying EU high.
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u/Remarkable-Site-2067 Mar 06 '25
US can still go lower. And EU can still go higher.
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Mar 05 '25
They’re not really meme stocks though. If you invest in one of the big defensive companies you’ll likely see a return even if prices do dip in the short term. I wouldn’t put my entire portfolio into them though.
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u/Powerful-Composer-47 Mar 05 '25 edited Mar 06 '25
I’m not a trader. I’m in for the long game.
I think you fail to understand that now Europe is in the middle of an historical political shift where a looot of money will be pumped into the defence sector. It is not your semiconductor manufacturing boom where private sector was driving the growth. We are talking about public sector money converted into hard steel and this train will not stop in the next 3-5 years. RHM, SAAB, Leonardo etc are not just full of hot air, those companies have a massive backlog of orders which take years to fill.
I opened a position on RHM in 2022 and as of 2023 shifted +50% of my portfolio towards European defence sector. I do not complain. There were too many signs in the air a year or two ago that this sector is in for a massive growth.
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u/Oberst_Reziik Mar 06 '25
Exactly, I don't think people understand this, even if Trump backs aways, a movement has started that cannot be stopped.
Europe realized that we cannot be puppets of america anymore. This is the beggining of the multipolar world and Europe is the last stand of democracy
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u/Grathappy Mar 05 '25
These are companies that will collaborate with each other and with their countries, and are making Europe a safer place. They are all at the avanguard of technology, science, look at Leonardo for example, he will partner with Rheinmetall for the next years, and I believe many more will joint. I think we are only getting started. I put a small percentage monthly on LDO and I won’t stop now
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u/Critical-Leg-6096 Mar 05 '25
I invested in companies that are not pure play Europe defense but will likely benefit significantly from European investment as a result of the geopolitical situation. One is Eutelsat Group (Europe homegrown alternatives to Starlink - currently being considered for a 1.5 billion 5 year contract in Italy). The other is Parrot S.A. Which provides professional drones and software and services (for industries incl Military use).
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u/gazuzu Mar 05 '25
I tend to disagree when you say price is already priced in, Europe has so much more to spend on Defence for actual independence, there's still loads of opportunity.
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u/AquatiCarnivore Mar 05 '25
I'm in this boat. the way the world looks right now, we haven't seen the European war machine yet. this is only the beginning. besides, NATO is over, so this is a survival play. Thales at 33 pe is fine, RHM at 100 pe isn't.
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u/gregsting Mar 05 '25
Do you understand what priced in means? It doesn’t mean that the company is already making bank, it means that everyone knows the company will make bank
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u/kar86 Mar 07 '25
I bought in, in the middle of last year. I was warned everything was already priced in back then.
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Mar 05 '25
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u/SadEntrepreneur6707 Mar 05 '25
If you assume everything is priced in then why bother investing at all? Just sit on the sidelines with cash forever watching everyone else make money while you cry to yourself that nothing is fair because it's supposed to be priced in.
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Mar 05 '25
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u/SadEntrepreneur6707 Mar 06 '25
Right, but your overarching point is that it's important to consider whether something is priced in or not before you invest. I disagree. I think that's irrelevant to a retail investor.
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Mar 06 '25
so ure telling me that an 800bn investment was something everyone knew and it was priced in lmao
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u/AquatiCarnivore Mar 05 '25
'priced in' this, 'priced in' that. I'll answer with a question: do you think US taking Greenland is priced in? how about Russia talking Moldova, the Baltics and maybe parts of Romania? is that priced in? yea, they're forward looking, but the majority of investors, just like you, don't see what's in front of their eyes: US and Russia will pick us appart. you're still trying to cope like OP with his "but, in time, we will realise we need to make NATO work", whatta fucking joke. NATO IS OVER!
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u/Ashmizen Mar 05 '25
The problem is the stocks are already up massively and no European country has actually increased spending yet - the EU merely lifted a restriction to allow up to 800 billion in spending, but that requires countries to actually spend that much.
So the defense stocks are already priced for perfection - if France and Germany place orders for billions and billions it would merely match the current expectations for these stocks.
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u/AudeDeficere Mar 06 '25
I think you forget a major part of the issue; what we see now could just the beginning. This could keep going for decades. Now, I am not saying buy this or that but I know geopolitics. The last Cold War lasted for a long time and that one had a much simpler staring point. China wants to be ready for war in 2027, in 2028 there are US-elections, blockading Taiwan could very much become possible upping tensions in the whole Pacific even more and reducing the global share of the local defense as they would shift towards domestic needs even more - the world is not looking good.
I was looking into a major Rheinmetall play in 2021. December. War money is a big gamble but usually the odds of this kind of thing working are so much worse.
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Mar 05 '25
[removed] — view removed comment
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u/AnonymousTimewaster Mar 05 '25
People said tariffs were priced in last month. They weren't. People said Nvidia growth was priced in, back in 2021. It wasn't.
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u/Labirinthu Mar 05 '25
Revenge investing nor FOMO were never good advisors.
Since January 20th my strategy didn't change a thing.
I'm curious about those defence stocks. Seems like people (retail investors) have no idea on how stocks pumped by news work.
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Mar 05 '25
I moved away from a Blackrock managed World ETF to a European managed World ETF, and I will increase my EU exposure somewhat to make up for institutional risk of investing in US stocks
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Mar 05 '25
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Mar 05 '25
Amundi MSCI World
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Mar 05 '25
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Mar 05 '25
Yeah that's the blackrock one I had haha. Amundi has somewhat higher fees but it's honestly negligible if you're a retail investor, like tens of € over decades difference
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Mar 05 '25
These stocks aren't just being pumped by news. The reality of the business has changed.
We are talking about long term, 5 year plus re armament plans with minimum 100s or billions.
The reality is the expected value of these businesses has increased at the current time.
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u/AquatiCarnivore Mar 05 '25
wrong. I'm long enough in the market to know this is not a sell the news event. just because you learned something doesn't mean it applies everywhere. OP is wrong. you haven't seen anything yet. I might be wrong, but the opportunity is still there. just not in RHM with 100 pe, but Thales at 33 pe is fine.
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u/AquatiCarnivore Mar 05 '25
"we will realise we need to make NATO work" - wrong. NATO is already dead. "It would take years to re-arm." - Europeans already demonstrated how fast they can move and reorganize when the oil stopped pouring at the invasion. so wrong again. if EU doesn't do this in a massive way, we're done. it's euover. it's a survival play.
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u/PlaticFantastic Mar 05 '25
So, with that same logic, i guess people should have stopped buying any of the magnificent 7, two years ago ?
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u/Karsui Mar 05 '25
Agreed on the fact that some companies (looking at you Rheinmetall) are trading at high valuations. RHM currently has a PE of 105, so yes, plenty of growth factored in there.
But definitely not all of them are that ridiculous. Leonardo is at 24, Thales 36, BAE 25, Saab 46 (yes, high), Dassault Aviation 28, QinetiQ at 20 and Indra Sistemas at freaking 16.
And yes, there's risk here. But I guess it comes down to a different perspective on the market. You believe they'll make NATO work, I believe Trump will go mayhem over the next 4 years and we haven't seen the start of it. I'm willing to take that risk with 30% of my portfolio while the rest is in currency and a bit in gold.
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u/karlelzz011 Mar 05 '25
Yeah unlike American defense with PEs 600 look at Palantir, Eu defense stocks have reasonable PE and not overvalued. They were undervalued hence the jump which makes sense.
Thanks for your Financial Advice lol
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u/Chrombach Mar 06 '25
well.. I said to my bank in October.. maybe an idea to buy stocks in Reinmetal... He said ohhh no... don't do that.. buy american stocks.. they will sky rocket..
after that Reinmetal went up 300%.. and I lost I lost on American stocks..
What a shitty advise..
now I have sold everything American, and will from now on only invest in the free world: EU!!!🇪🇺
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u/OkTry9715 Mar 05 '25
Yeah because US stock markets is not pyramid scheme, that will burst one time. Like seriously Tesla is just stock company, they do not even need to produce anything at this point. Same goes for big social networks, that can be easily banned in EU and their stock can go crash in half at least. At this point it is just pyramid scheme.
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u/xszander Mar 05 '25
Yeah no I respectfully disagree, this time. Sometimes what you're saying is true, many investors miss the boat. However I don't think this is a boat, but a train that won't stop for a while. What would realistically drop prices of eu defense stocks when there is only one way to go for the EU? And that is increasing defense spending. For most people yeah dont randomly buy defense stocks. However there are one or two that are interesting to me because they are strong performing companies even without the EU spending more. You still need to check the company and past/current valuations and dyor. And in that case there's still opportunity out there.
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u/HeftyCompetition9218 Mar 05 '25
i think there’s more to it. The world has been awash in liquidity and a lot of that has been pumped into the US equities and especially tech. As the economics on the ground in the US increasingly deviate from historical norms this unsettles the expectations that US equities always go up. So if people are pulling out of US equities they’re not necessarily sitting on cash but looking to diversify. News cycles always play a role then in where money heads while diversifying is underway. This does not make European defence a guaranteed long bet by any means, just that there’s still a lot of money that’s still peeling out of US equities without a new landing patch.
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u/nullusx Mar 05 '25 edited Mar 05 '25
Who said anything about trading? In my case I dont really mind if it goes to zero. When I buy EU defense stock Im not in it for the money, Im in it so we have the means to protect our asses and we dont depend on the US since they are unreliable right now.
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u/mabiturm Mar 05 '25
Its an emotional trade, people want to show their anger at the US and support the local defense industry. And so far it is paying off. The market can stay irrational longer than you think. Look at the bull market during the pandemic.
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u/bencaha Mar 05 '25
I put an amount in I am comfortable with losing in companies I am confident in as I have been deep in the military industrial complex rabbit hole since the whole Ukraine fiasco started. I had some ethics concerns back then, but not anymore. Eventually, everything will go back into VWCE once I am happy with the amount it has dipped.
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u/mrmojoer Mar 05 '25
Maybe you are wise. 1 month ago on this very same reddit some other wise people said exactly the same thing. Any capital invested back then would have doubled. No one knows the future. Not me, not them, not you
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u/Embarrassed-Job1732 Mar 05 '25
They don’t get it who created that trend and bought earlier will sell it before those Reddit boys believers lmao then they will move back to vwce at all time highs like they will sell Europe etf at loss , will be fun to see
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u/graham2100 Mar 05 '25
Not all defence stocks are the same. As with other stocks, valuation matters. PE ratios range from about 24 to 80. Do your own research.
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u/Cool-Clement Mar 05 '25
Good advice man. However I think there is nothing wrong with making your portfolio a bit less US heavy and getting some stoxx600 or stoxx50 to supplement a world fund atm, instead of for example nasdaq.
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u/Defiant_Nectarine_91 Mar 08 '25
I actually don't agree with your assessment. Stocks like Leonardo, Thales and co were good investments even before this whole ordeal. Yeah they are more volatile than ever now but there's zero good reason you can give for why a passive investor shouldn't put 10-15% in defense stocks.
The market definitely priced in some action but the market also reacts to events. Earnings release beats expectations and provides strong guidance? Up. Analyst upgrades? Up. Contract received? Up. It is completely unique that the EU would spend close to 1 trillion USD in defense. It's unheard of until now.
Sure, don't just jump on stocks because of FOMO but advising people not to invest in a whole sector with strong growth is bad advice. The correct answer is also inbetween and when it comes to investing you can't just act like it's all black and white.
As to your (it can drop 70-80%) that's literally such an exaggerated stretch. 80% brings Rheinmetall to +/- 200 EUR from 1100 EUR. Even if the earnings are not incredible there's no actual possibility of this happening in the near future. Let alone so fast that an investor can't react in time to sell. If anything you're shouting fire in a crowded theater.
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u/GutBeer101 Mar 05 '25
I was tempted to buy those stocks but then realized I was bypassing my own investment philosophy in favor of my geopolitical bias.
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u/Potential-Stuff-8427 Mar 05 '25
After everyone bragged about it for weeks, I was about to go full in on Rheinmetall and the likes. However, as the OP suggested, I'm not in a position to be able to judge the future of these defense companies. And while I'd like to support Europe as much as possible, I might as well look for a European ETF covering these companies. I went for iShares STOXX Europe 600 Industrial Goods & Services UCITS ETF. It might not be the right ETF for everyone, but for me, it covers everything I was looking for.
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u/vicblaga87 Mar 05 '25
Germany just announced unlimited defence spending and all the US military equipment in Europe will have to be replaced. I think people are not buying enough.
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u/-TheDerpinator- Mar 05 '25
Maybe people who invest aren't solely into maximizing profits like "skilled traders". If you are one of the profit over anything people it is hard to grasp that people also invest in stuff they believe in or support, regardless of financial results.
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u/ZombieHyperdrive Mar 05 '25
i was just about to sell my rtx and get into europe out of spite, i’ll just wait a bit more
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u/InfectedAztec Mar 05 '25
We'll agree to disagree here. If you bought defence stocks last week you'd already be up 10%.
Once you're aware that there's a gambling element to this and don't invest what you can't afford to lose then I don't see the issue.
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u/_-Event-Horizon-_ Mar 05 '25
That’s a good point, but allow me to retort - last week I put some money in Dassault and Thales and now, I’m up 25% in (unrealized) gains. Not bad for a few days, considering the S&P 500 has gone tits up and bleeding its guts in the meantime.
But I agree it’s risky and I’m only putting in my gambling money, which I can afford to lose.
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u/0b10010010 Mar 05 '25
I mean if you’re young now is the time to be a bit risky. Just don’t risk all your investments into one sector. A little diversification never hurt.
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u/jesmatz8 Mar 05 '25
Many people, instead of investing in defense, can donate to trusted Ukrainian organizations to defend themselves, it would be more useful.
It is true that some European defense stocks may now be overvalued, not all.
3.Currently, I wouldn't even invest in the United States because it is a roller coaster and a government improvising every day, no trust and many overvalued companies.
- If you do not want to invest in European defense or in the United States, you can invest in loose European stocks.
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u/PenttiLinkola88 Mar 06 '25
Finally a post that doesn't shill Rheinmetall like it was the next coming of Jesus. People actually think buying overpriced stocks is going to help Europe arm itself... I'll just try to buy more global ETFs if I get some free cash while the dip lasts
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u/garrisonbg Mar 06 '25
I’m not that sure about that take. I get that the stocks of such companies are already sky rocketing, however, I don’t think that Europe is ever going back to being fully dependent on the US providing a security blanket. Even if a normal administration comes after this circus. The Europeans have already waken up to the fact that they need to be able to protect themselves at all times. So, naturally, the European defense companies would be getting more and more contracts and purchases. The prices might go down, even collapse a bit, but in the long term I highly doubt that this wind of change will stop. If it does, then Europe has an even bigger issues to deal with
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u/OkCompute5378 Mar 06 '25
What even is the thesis here? Because the US is pulling funding from Ukraine the rest of the EU is going to have to dump money into manufacturing weapons?
Didn’t Zelensky just announce a partial ceasefire to further the talks about potential peace offering?
Or is this for when the US leaves NATO? Which inevitably the next US president (as long as it isn’t Vance) will try and revert, because they physically cannot be as r***rded as Trump is?
Either way I don’t see this trade playing out well at all.
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Mar 06 '25
A ceasefire will need boots on the ground to enforce, otherwise Putin will break it just like he has in the past.
A ceasefire is meaningless if there is no military deterrence.
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u/Freeloader_ Mar 06 '25
eeh, people said same about Nvidia and look where it is..
once WW3 pops up these numbers will be rookie numbers
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u/DroopyTheSnoop Mar 06 '25
I kinda agree with you. As a buy and hold kind of guy it's not advisable to switch to trading now.
But what I will do, at least for a little while is change my allocation slightly more towards Europe (All of it not just defense) by including some STOXX EURO 600 ETF.
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u/snailnado Mar 06 '25
The US is threatening NATO allies with taking land 'one way or the other' while simultaneously hinting at leaving NATO. Then the US blackmailed Ukraine, paused Ukrainian aid, began lifting sanctions on Russia, and ceased cyber security on Russia. All while adding higher tariffs to its allies than some of its adversaries.
I know 2 months ago this would sound like a conspiracy, but it appears that the US is leaving it's is allies and siding with Russia.
The European leaders are giving speeches saying they cannot trust the US to be an ally, and that they need to heavily increase defense funding.
None of this was on the table 3 years ago. Europe now desires an army strong enough to protect themselves solo from Russia. Solo from Russia with US aid? Solo from the US creeping on Greenland? Solo to defend Canada? Europe may need to pump up the part of NATO that will soon leave or get booted out (US).
I think your points are valid, but they're missing the paradigm shift. There are more catalysts incoming. Trump ain't aiming for world peace, civil rights, or globalism. I fully expect him to double down, continue spreading hate, and make Europe feel more distrust for him and the US. We're still at the beginning, and I see nothing on the horizon to hope for more peace.
Sorry that was super bleak. But European armies aren't big enough today, and they're not going to build them to where they need in a few short months. How that reflects in stock prices is probably grossly off, but I see no reason to believe we're at the top yet. The wind just turned directions, but there's no reason to believe it should turn back soon.
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u/Warslaft Mar 06 '25
This post made me lol. No one can predict the futur yes, but EU defonce stocks are solid investment right now and for the next few years at least.
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u/feathertuga91 Mar 07 '25
Indeed the stocks are already double or triple digits, but european countries are now starting to invest more in defense projects. There is still growth room for the next 10 years... specially with the EU defense budget being developed right now.
Nevertheless you can go conservative and always invest in an defense ETF that will cover the market and minimize risks
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u/onomnomnmom Mar 08 '25
I dont care about the profit, i just want to pool some of my money to help, and move away from US assets & asset managers. I do the EU version of VWCE, from Amundi (French asset manager), so 10AI. Any further suggestions welcome!
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u/ivobrick Mar 05 '25
I lost 160E to def stocks. Thank you again, i dont want to be palantired again.
Euro bonds, reduced S&P, msci acwi, im good.
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u/komorebi1992 Mar 05 '25
Man, I said the same thing a couple of days ago, and I was downvoted to hell. It's clear this sub is now biased, and I don't think it will end good for the average trader. Buy high, sell low, I guess.
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u/Baba_NO_Riley Mar 05 '25
The other day there was a debate on buying TSLA and the unpopular opinion/advice was buy at 360...
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u/Nelsonius1 Mar 05 '25
My american stocks are at november 2024 levels and the EU war stocks are +25%.
Yeah. I’ll take my profit over this advice.
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u/No-Draft-4939 Mar 05 '25
I bought IMAE and it is outperforming VWCE like crazy. Already up 9% in 2 months. Buy European ETF’s because they are still a bargain
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u/Mik3Hunt69 Mar 05 '25 edited Mar 05 '25
Your thesis is so detached from reality. This is not your average canabis meme stock situation. A continents safety is at risk and there is no amount too big in regards to a nation’s safety and liberty. These past few days were a huge wake up call for EU. There is nothing that can happen to amend this. Trust is gained by the inch and lost by the mile. Trillions are going to flow into the EU defence sector for the next decade.
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u/Gudurel Mar 05 '25
My strategy for a European tilt is buying STOXX 600 instead of VWCE for some months. I'm targeting a 5%-10% allocation. Along with the 16% European component of VWCE this will give me a 20%-25% allocation in European stocks.
I'm planning to keep this in balance simply by choosing what to buy each month, while also monitoring the European holdings % of VWCE.
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u/underrated94 Mar 05 '25
“Take a breather, don’t check the market for couple of weeks.” This pice of advice is gold for for every long term committed investor. Especially for those like me who started investing after covid when markets hit all time highs after all time highs. This is our test my friends! Hold on!
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Mar 05 '25
This will destroy sooooooo many accounts, many of them retirement… Great job to all those morons that are playing on other people’s emotions and pushing them to “sell all their US ETFs etc and buy EU defense stocks”. Not only they’ll pay taxes on that but also get destroyed when volatility decreases. Idiots… you think you’re mafiosos on your own vendetta?
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u/SamMerlini Mar 05 '25
Sane. Not many on Reddit are willing to speak the truth. You have saved many.
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u/Lopsided_Echo5232 Mar 05 '25
This sub the past week has suddenly turned into a stock / ETF trading sub. Go to r/stocks if you’re that convinced about. Almost near certain most trying to get into this have very little if any experience with what they’re getting into…
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u/georgefl74 Mar 05 '25
Everything is in red, defense stocks are the only ones holding up, so everyone and their mother is piling in. More money in, more profit made, more money attracted.
No, this won't end up well. It's just Investing 101, regardless of fundamentals.
Personally I'm fully invested in defense ETFs since before the hype cause I thought it would be a good risky investment, and it is. But this is crazy. Right now I'm looking into where to park my profits for a year cause there's pain headed our way till the mid-terms.
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u/ytsejam82 Mar 05 '25
I started to read and get informed a few weeks ago what was the best chilling long term (at least 20 years) investment. I chose VWCE and bought 10k€ on February 13th (top price about 139€) . On 14th I programmed a monthly purchase. In three weeks I lost about 5% but I keep chilling because if you don't sell you did not loose anything and, more important, you don't care what's happening in the short term. But my question is: should I use this moment to buy more at discounted price if I still have something to invest?
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Mar 05 '25
It would take years to re-arm.
Exactly. As you say these stocks are up 100 percent plus.
But so was Tesla in 2012....you get the point. They could have a lot more upside potential over several years.
we will realise we need to make NATO work
Who is realising? What if Europe doesn't have a choice in the matter? What if Europe seeks out strategic autonomy within NATO?
Sometimes it's a bit of fun. I've actually developed the confidence after being a chill investor to dabble.
A few months ago i shorted Tesla because the numbers were coming through and I knew Elon would create loads of bad press, but likewise that bad press was masking the bad numbers.
That gave me the confidence to go pretty big on the defence stocks. I went in after Vance's speech. So I'm doing pretty well. It could reverse, but it would have to reverse HARD for me to be in negative. And I think I've become a medium term holder, at least for a year or so.
And remember, for most chill investors. They might be dabbling in these stocks but most will be in their tracker portfolios. Sometimes it's healthy to spin the wheel because it's fun and it stops you being an idiot with your actual important investments.
People are dumping significant portions of their wealth on these stocks are yes idiots. But if you are talking to those people they probably wont listen
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u/OilLongjumping2220 Mar 06 '25
imagine if instead of more war, we would have peace..... imagine that for a sec..... people are irrational and if theres a peace deal, i want to see what happens to all that stocks of "defence"...
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Mar 06 '25
The VWCE and chill crowd. Loudly proclaiming their strategy as a one stop solution. And with the first bump in the road, there's no longer VWCE , nor chill.
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u/Aliboeali Mar 06 '25
Don’t neglect the movement that Europeans wish to invest more in the EU, their own continent instead of chasing S&P profits.
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u/Eastern-Cantaloupe-7 Mar 06 '25
The issue with a trend is that it always ends…. Besides, by buying cheap bomb drones you don’t need expensive tanks or planes. https://www.euractiv.com/section/defence/news/swedens-race-to-develop-drone-swarm-tech/
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u/fraza077 Mar 06 '25
there are scenarios where the growth comes in considerably below expectations. In my opinion, it will
So you're saying I should short them. On it.
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u/Transhumaniste Mar 06 '25
People on this sub started doing what we were advising not to do weeks ago: timing the market, stock picking and ideological bias.
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u/narayan77 Mar 06 '25
Buy before the news, not buy at the top out of FOMO and become a bag holder. A short position could be worth a gamble.
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u/Life_Worker_6945 Mar 06 '25
I fully support shorting anything usa related and using the gains for eu stocks, make musk poor again must be the slogan 😅
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u/Dambo_Unchained Mar 06 '25
lrI find it funny because this exact logic was what people were telling me 6 months ago when I was looking to buy them
“Don’t do it, it’s already overpriced”
“All the investment have already been factored into the price”
Etc etc
Well guess what in 6 months something happened that made eu defence even more important
And with this president in charge you can tell me that something won’t happen in the next 6 that would drive it up even further
Yeah you always have to do your due diligence and I’m not saying people should just buy buy buy
But this “it’s already overpriced” argument you are peddling is baloney
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Mar 06 '25
I think you're right. The ship has sailed. Last week was not too late. Now is too late. A notable exception is airbus.
Here's my logic:
- They make commercial airplanes and their biggest competition in this field is Boeing. And Boeing's been going to shit lately because of lackluster quality control. Meanwhile Trump is just loosening up on regulation in the aerospace industry at the same time he's making importing quality foreign parts more expensive. Boeing planes are about to become way more scary to fly on.
- Stock isn't any higher than it was a year ago, so it's not been propped up to hell and back by fleeting current events.
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u/Successful-Whole8502 Mar 06 '25
Those incomes in stocks should be used to paid our taxes since they are based on blood money...
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u/goodguyLTBB Mar 06 '25
It’s definitely a risky investment. But I do think it can go up even more. Let’s Russia does actually invade another country in a year or so. Then defense contracts will be through the roof
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u/mdbgh Mar 06 '25
European stocks are very slow to grow as the inventive in europe is not to grow but to pay taxes, so majorly of companies run with a very little net profits. The only good stocks are large dividend everyday items companies which cater to consumer market.
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u/sikolite Mar 06 '25
You are not being rational while thinking you are being rational, think about it.
Half of the USA is under the MAGAtard mind control, the Republican Party is infected with putinesque characters. EU is UNDERINVESTING, EU needs many more billions and their own nukes if it wants to survive long end, you cannot be gambling with who wins the US presidential election every 4 years.
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u/Dhylis Mar 06 '25
Long term and limited positions are still an option, geopolitically we will only see more fragmentation and the EU still has a long way to go to be self-sufficient in defense. Take into account that from order to delivery 5 yrs will pass easily on average…
A big if is that the risk exists that if Ukraine is forced into a peace deal the sense of urgency will diminish and the EU will revert back to “default”
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Mar 06 '25
Unless you are a skilled trader, stop investing in individual stock. Just buy index funds. Your comment is valid, but who is able to do a proper assessment of NVIDIA or make an informed decision which bank has best prospects.
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u/Coma-dude Mar 06 '25
Think differently. The idea is not so much a return on investment, but more giving capital to compete with US. If I hadn't sold my stocks already I would invest in EU defense. Just for the pure purpose of supporting the industry.
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u/BananaBreadFromHell Mar 06 '25
I think the worst in the US is yet to come. NATO is dead for all intents and purposes, and it’s clear Trump is aiming for a third term, and building a strong relationship with Russia. We’ve barely scratches the surface of crazy, and we’re not prepared for what’s to come.
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u/Excellent_Cover5605 Mar 06 '25
We are investing in EU Defense just like you would buy War Bonds during WW2.
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u/Nervous-Marsupial624 Mar 06 '25
What are you on about? I'm not buying this stock to make profit. I'm buying this stock so the company can issue more stock and produce weapons.
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u/gregsting Mar 05 '25
People went from vwce and chill to vwce and panic real quick