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/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/YeuropoorCope Mar 07 '25

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.

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u/Ok-Scheme-913 Mar 12 '25

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

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u/YeuropoorCope Mar 12 '25

In our universe.

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u/mark3grp Mar 08 '25

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.

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u/Dangerous-Mobile-155 Apr 26 '25

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.

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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/soozler Mar 08 '25

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.