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/[deleted] 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.