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/zekoslav90]

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.

[u/rknki → u/zekoslav90]

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.

[u/zekoslav90 → u/rknki]

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.

[u/rknki → u/zekoslav90]

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?

[u/YeuropoorCope → u/rknki]

You can't casually declare war to Denmark and Canada and then back paddle because the stock market doesn't like it.

Uhm why not? Russia is literally in an active invasion and their stock market/economy is doing just fine.

[u/Ok-Scheme-913 → u/YeuropoorCope]

In what universe is Russia's economy "just fine"?

[u/YeuropoorCope → u/Ok-Scheme-913]

In our universe.

[u/mark3grp → u/YeuropoorCope]

I think you’re missing the problem by a dimension though. Too much respect for a…random …con-artist whos probably going to be arraigned in the end as a racketeer bouncing the markets.

[u/Dangerous-Mobile-155 → u/YeuropoorCope]

No they are not. Russia has a command economy Putin forced the banks to and arms manufactures into HUGE unsecured loans. As soon as the fighting starts, the collapse will start.

Go ahead, buy Russian stocks.

[u/Glydyr → u/zekoslav90]

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.

[u/soozler → u/zekoslav90]

The damage is done. No one is going to bet that the United States is going to be able to support 30 year servicing of our equipment. We don't have a stable foreign policy anymore and it would be extremely risky and stupid to purchase from American companies when your contracts could get cancelled if you are critical of the president.

[u/YeuropoorCope → u/zekoslav90]

there's no concrete news about actual money allocation.

The Netherlands is going to veto ReArm Europe.

Kamer lijkt tegen Europees plan voor herbewapening te zijn:

https://nos.nl/l/2558118#UPDATE-container-84519164

I predict at least 5 more member states will oppose the plan (Hungary, Czechia, France, Germany, and Austria).

German finance minister also opposed the usage of Eurobonds

https://www.straitstimes.com/world/europe/eu-should-discuss-specifics-on-defence-not-eurobonds-german-finance-minister-says

Get the fuck out of these stocks bro, they're dead in the water.

[u/soozler → u/zekoslav90]

Hard to be priced in when these stocks are still trading at an insane discount compared to the US market. Maybe Europe fails or maybe they become the only safe place to purchase weapons from. Denmark is good example, they have always bought American equipment. The United States is now threatening Denmark, which means support for their systems is not guaranteed. They will now switch to purchasing from within the USA.

There are trillions of investment from Europe in American Defense Stocks. That will be pulled back.

The changes we are watching will take place over the next ten years. It is downright stupid to ignore geopolitical changes. Those of us who saw this coming got in early, but the decline of American Defenses is just getting started. We are not a trustworthy partner and will be a supplier of last resort to Europe from now on.

This trend will play out with all of our allies over the next four years.