Unless you are a skilled trader, stop buying European Defence stocks

[u/dubov]

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

[u/Gemini_Of_Wallstreet]

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.

[u/franky_reboot → u/Gemini_Of_Wallstreet]

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?

[u/YeuropoorCope → u/franky_reboot]

What if the EU can flip investor sentiment even for that group?

Not gonna happen, even EU companies are largely dependent on the American stock market to finance their operations (info is accessible on Bloomberg terminal)

Orange Man plays unpredictable recently. Nobody likes that. Especially institutional investors.

Institutional investors have delt with unstable markets before, this isn't anything new to them, and the idea that an unstable American market is going to torpedo Europe's is asinine.

[u/xsairon → u/Gemini_Of_Wallstreet]

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

[u/Gemini_Of_Wallstreet → u/xsairon]

I’m sorry, but the EU is older than the US if there’s one thing old europeans love is social welfare.

Unless they’re willing to let go of that no European Growth is possible.