“Simplicity is one thing, oversimplification is another.”

-Philo

As of March 16th, philoinvestor.com is now hosted on the Ghost platform.

• You can find the new website on philoinvestor.com and subscribe here.

• If you are already subscribed, sign in here.

• Note that the newsletter will now be sent from philoinvestor@ghost.io — in case you notice the emails not being received, check your spam etc.

• Join us on Telegram by clicking here.

You will no longer receive notifications via the Substack app.

So make sure you turn email notifications on by clicking here 👇

Turn Mail Notifications On

Sincerely,

Philo 🦉

"The conflicts in Ukraine and around Taiwan are extensions of a greater conflict — the one between the US and the broader G7 Vs a rising China and the broader BRICS.”

The Battle for Europa, May 2024

“Plata, o plomo.”

—Pablo Escobar, Back in the day

“I'm gonna make him an offer he can't refuse.”

—Don Corleone, The Godfather

The Monroe Doctrine à la Trump

The US has made its move. Venezuela has been struck, Maduro and his wife have been captured and flown out of the country.

A power move by the Donald — now let’s see what comes from, and after this.

The Big Picture

This is yuge — with more dimensions and consequences than you think. But we will deconstruct them and assess them herein.

Let’s start from the top, why did Trump and the US make this move?

If I talk at my number two adversary in the region: Russia. Of course, the countries, Cuba, Venezuela, and Nicaragua — with Russia relationships.

But why this region matters with all of its rich resources and rare Earth elements?

You’ve got the lithium triangle, which is needed for technology today — 60% of the world’s lithium is in the lithium triangle, Argentina, Bolivia, Chile. We just have the largest oil reserves, light sweet crude, discovered off of Guyana over a year ago.

You have Venezuela’s resources as well, with oil, copper, gold. In the Amazon, lungs of the world. We have 31% of the world’s fresh water in this region, too. I mean, it’s just off the charts. We have a lot to do. This region matters. So it has a lot to do with national security. And we need to step up our game.

—Gen. Laura Richardson, from early 2025.

So we have the economic supremacy angle, security of supply and procurement of resources playbook. We all know that the cheap procurement of resources is key to economic supremacy. And we all know what happens when colonisation retreats — I’m looking at you British Empire 🫵🏻

Now, in an attempt to MAGA and prolong and continue American Supremacy; Trump is engaging in some late-stage empire balance-sheet repair!

The truth is, he is forced to. The choices are either playing a good offence or going to the table ready to play second fiddle. This is the American reality today — forget about Supremacy or Exceptionalism.

China is cornering critical metals, signing up too many resource-rich countries to their team and has one foot on Taiwan and its strategic semiconductor industry. On top of all this, it seems to be winning the Economic Supremacy war too.

The US is cornered, what’s a Trump to do?

And let’s not forget about the US Fiscal situation; deficits are out of control and the debt is officially unsustainable. Trump can’t cut a dollar from the budget or everything comes crumbling down.

So why not acquihire Venezuela by force and merge Venezuela’s assets with the American Empire? 💡

National Security and Domestic Interests

This Administration published its National Security Strategy in November of 2025 — a 33 page document outlining how Trump et al. see the world and the future of the US in it. (Or the future of the world in the US!)

Before we analyse the important bits from the document, I note the following.

This is obviously not about drugs or borders — but both a forced move and one that makes a lot of sense from Trump’s POV. The thing is, can it backfire? 🪃🔥

Read more

Why GPT-5 feels different not by mistake but by intention. Thread on X.

The AI Compute Paradox. Video on X.

META’s numbers look amazing, until you follow the cash. Video on X.

Thoughts on re-testing the 2022 lows. Post on X.

MSFT and self-generated demand! Video on X.

For more about the course, check the curriculum at philomastery.com

To join you must fill in the form and we will get back to you with more.

Philo 🦉

Never miss a trade again.

Was walking in Bond Street yesterday and I wanted to record this Philo’s Thoughts. Ideas flow better when walking rather than when sitting in front of a podcast mic..

If you want to read more about my views on Crypto at different times, see the below previously paywalled posts.

CRYPTO

Check the charts on those dates to see what I said when, and what happened later.

More recently I posted this thread on X about BTC going to Zero.

Why Bitcoin is going to Zero.

EQUITIES

If you choose to learn more about equity investing you can visit the following resources:

Or join Philo’s Academy at whop.com/philosacademy.

Learn more about it here.

Philo 🦉

P.S. We also have a Youtube channel with investing education videos.

Link to the playlist here.

This Philo’s Thoughts🎙️ is a response to the above view put forward by . I recorded a brief/big-picture reply whilst on vacation and posting it now.

I believe part-time investors cannot only survive but also PROSPER in financial markets. Of course a certain set of skills and experience is required to do this.

Since the inception of Philoinvestor I have published investment mindset and education pieces.

More recently I launched Philo’s Academy, a community for learning.

More Philo’s Educational Content

Philo’s Academy

Find out more about the investing course in Philo’s Academy @ philomastery.com and join us on Whop @ whop.com/philosacademy

But how many consider life cycles when they pick stocks?

As we can see from the diagram above — the typical life cycle has four stages.

1. Early Stage

2. Growth Stage

3. Maturity

4. Decline

Each stage can be described by a general set of characteristics — let’s look into them.

Early Stage

In the early stages the concept is unproven, and so business risk is higher. This means more uncertainty and a wider range of outcomes. The business could literally fail, or take over the world.

Growth Stage

In the growth stage the concept has had time to prove itself, this reduces risk and uncertainty. The range of outcomes now starts to reduce on the downside, but the upside remains open. The business is growing fast.

This does not mean risk is now inexistent — competition could be fierce or an event could happen that changes the whole trajectory of the business. The moat could be strengthening or eroding.

Late Stage (Maturity)

The business is now maturing. Uncertainty is diminished further, but so are growth rates. This means the range of outcomes start to close both to the downside and the upside.

But business decline could be just around the corner. The business could move sideways for a long time or start to die slowly. Management competence and competitive dynamics are key here.

Decline Stage

The business starts to slow and threats to appear. By now, management is rich and happy. They have no real reason to be proactive and their sectors start to get ahead of them. They stay behind. The risk-taking mindset is long gone, and so is the founder. The moat is eroding.

What does this mean for investors?

Each stage carries its own dynamics — which makes the payoff, ceteris paribus, a function of life cycles.

In other words, risk-reward shifts with a company’s life cycle. If you ignore that, you’re setting yourself up for failure.

But ceteris are rarely paribus — all things are rarely the same.

And so for each stage, investors must also weigh for the specific company they are analysing:

• Range of Outcomes

• Optionality & Risk/Reward

• Valuation & Expected Value

• Business Model —> of which business risks & economics stem from

• Competitive Environment / Moat

Module 17 of the Zero to Hero in Investing course is all about Life Cycles in Investing. Access the course by joining Philo’s Academy here.

Real-World Examples

Let’s use this framework to look into Palantir and Apple. The former is positioned at the left-hand of the chart while the latter more towards the right. Two very distinct examples.

Early/Growth Stage: Palantir

Palantir was founded just 22 years ago and operates in the data industry. It has strong roots in military and intelligence circles and started out by catering to them. Today, it has expanded its offerings to corporates and governments as well.

The company will barely make $5bln in Sales for FY2025, but with 80% Gross Margin on those Sales. As they are a service business, overheads are massive, which meant they were barely breaking even not long ago.

Palantir has been a major beneficiary of the AI-adoption wave and keeps winning contracts as the world adopts AI technology.

But it’s now selling for almost $300bln — even if it makes $1bln in net income for 2025, that’s 300X earnings… And if that were not enough, one must understand the business environment extremely well to assess where this business will be in 5 years — not to mention 10 years plus. Where is the margin of safety?

On top of all this, you must assess regulatory and general risks pertaining to the business model. And so, very briefly, risk/reward is skewed to the downside for this one.

Maturity Stage: Apple

Apple was founded 50 years ago and is a household name worldwide, unlike Palantir. Of course, that’s because Apple is possibly the most aspirational brand on the planet, at least for the mass-market. But it is well into its maturity stage.

iPhone units sold per year peaked many years ago — everyone owns an iPhone by now! The iPhone segment carries more than 50% of the company’s revenue, while 25% comes from Services — which is mostly tied to the iOS ecosystem.

The remainder of the business is from iPad, Mac and Wearables & Accessories. Basically the business is reliant on the iPhone and the iOS ecosystem. A decline in the iPhone would equal to a decline in the company.

Product Life Cycle = Company Life Cycle

For 2024 the company generated $400bln in Sales at a a 32% EBIT, but sells for a market cap of $3trln — 7.5X Sales!

~24X EBIT for a company in maturity with

• increasing global competition in smartphones

• serious regulatory/legal issues (e.g. AppStore take rate issue)

• and in risk of losing the $20bln a year it gets from Google as the latter faces the DOJ lawsuit

It’s already expensive, imagine if it loses another $20bln from the bottom line. Again, summing it all up, the risks are heavily to the downside on this one.

Philo 🦉

Philo’s Academy

For much more on life cycles and how to think about them in stock selection and portfolio management, join Philo’s Academy here.

How does Greek mythology apply to investing?

ZEUS ⚡️

Zeus is the equivalent of the tight-aggressive poker player. He ruled not by chasing every whim, but by choosing when to act. In the same manner, great investors don’t rush — they wait and focus their energies. They understand that discipline is strength and randomness is not a strategy. In other words — they understand the value of waiting for a fat pitch.

ATHENA 🦬

Athena is the goddess of wisdom and she prizes clarity over speed. In investing knowing what to ignore is a superpower. Wisdom is proceeding with caution and foresight, not impulse. Wisdom is thinking long term when others get lost in the day to day.

HADES ☠️

Hades is the god of the dead and the king of the underworld. He conveys the acceptance of death as a part of life and teaches that death should be practiced daily.

Memento Mori.

Death and destruction are also part of markets — cycles too. Companies go bankrupt, wiping out owners. Cycles turn, destroying value in the process.

It’s like financial natural selection — where capital destruction drives value creation. To succeed in markets, learn to accept death and to profit from destruction.

APOLLO 💡

Apollo ruled light, truth, and foresight. He was the god of prophecy, seeing what others couldn’t. Apollo’s investing lessons are that clarity beats complexity. Seek truth, not hype.

The best investors see the world as it is — not as they wish it to be. Be data dependent, not personally biased — let reason rule you.

PROMETHEUS 🔥

Prometheus was an innovator, he gave fire to humans — but suffered from it. Innovation can lead to progress and breakthroughs, but it comes with big risks. Investing in bold ideas means getting burned sometimes. You need courage and a long enough timeline to let fire become light.

Learn from Prometheus: know when to bring the fire and when to let others do it for you.

ANTINOOS 🗿

When Emperor Hadrian lost Antinoos to the Nile, grief turned into worship. He built temples, statues, even a city in the boy’s name. Antinoos became a god — not for his deeds, but for how deeply he was idolised.

We fall in love with stocks, founders, stories. The more you idealise, the harder it is to see flaws.

Hadrian’s devotion was human. In markets it can be fatal. Don’t idolise — analyse.

NARCISSUS 🪞

Narcissus was a hunter from Thespiae known for his beauty — but he fell in love with himself. That’s where the term Narcissism comes from.

In investing, the most important thing to deal with is the self, the ego. Do not become obsessed with your own reflection — your status, your short-term wins, how you are better than the rest. That will be your downfall.

Narcissus wasn’t a god — he was a mere mortal, like you. So approach investing as one.

ULYSSES ⛵️

The story of Ulysses, as told in Homer’s Odyssey, is one of battling both the gods and himself.

When dealing with the gods there are things out of your control — it’s not up to you. It’t the same with markets; focus on the knowable and controllable — find ways to protect yourself from the rest.

So learn from Ulysses — make wise decisions, learn from mistakes, respect the gods and think long term.

Philo 🦉

The course is finally launching in May, join us by signing up at philomastery.com

E-mail me directly at thinker@philoinvestor.com to say Hi and I will add you to the list.

The Nasdaq 100 found support on 16,500 mark, before bouncing strong this week. The thing is, we had that level set from February 3rd in this piece.

This was a Breakout by Philo. In Breakout we analyse markets from a technical perspective first, before adding a fundamental context to the setup to get a better understanding.

So, we used that level of importance and market inputs to understand that there was a high chance the sharp sell-off would pause there, or even end.

Here’s the chart with the level there unchanged since then. Not bad eh?

But that’s not all…

We follow trades and setup on the daily in Philochat, here’s what we said about the bounce. I left this Philochat open for everyone, access it directly here.

Subscribe now

RELEASED FROM PAYWALL

There is a lot of chatter about Trump “using” Europe to go against China.. I won’t discuss the merits of these rumours but I released from paywall a piece from last year where I talk about the importance of Europe in the emerging setup.

AKA the Philo crystal ball…. 🔮🦉

MAGA AS RELIGION

Last week I published a 7-minute Philo’s Thoughts on the setup with Trump 2.0 and generally where America finds itself in the Empire Life Cycle.

Hint: It’s pretty late cycle! I won’t say more — listen to it. REALLY.

YOUTUBE

After a 3 month pause we have another education video out on the Philoinvestor Youtube. Check it out by clicking the link below!

SURVIVAL in the time of Trump 2.0

Time are tough, and they are going to get tougher. Consider the below a though experiment on how to survive (and prosper) during this crisis.

I meshed some Charlie Munger wisdom with Peter Lynch tactics to create this blueprint.

The Confidence Differential

If you are having trouble understanding Forex flows, and even why the bond market is cracking — read this piece. It will give you great perspective in understanding global macro setups, and why they sometimes reverse abruptly.

Remember, markets are never linear! I guess that’s the problem armchair economists have.

PHILO’S ACADEMY

The course is finally launching in May, join us by signing up at philomastery.com

E-mail me directly at thinker@philoinvestor.com to say Hi and I will add you to the list.

Sincerely,

Philo 🦉

Subscribe now

A Word from our Sponsors

The “Review” is sponsored by Self-Care Supremacy, read their last piece here. Self-Care Supremacy is a free newsletter on following your highest path.

Self-Care Supremacy

The Importance of the Odyssey

I remember when the struggle used to be mean something — now people just think it’s pointless…

Read more

a year ago · 3 likes · 1 comment · Self-Care Supremacy

Further Reading

In this Philo’s Thoughts I share my thoughts on Trump 2.0 and Tariffs as they relate to the broader market setup.

As you can hear, my voice is a bit better. More progress on that front soon.

This reference to a “Detox” is starting to sound a lot like “Transitory Inflation”. This time the error isn’t coming from the Fed and J-POW, it’s coming from within the White House and the Treasury…

Remember this quote from Wall Street 2? Click on the link below.

Idealism kills every trade, pal

MAGA has become an ideology and a religion, causing some to not see straight.

By now, everyone is calling Trump 2.0’s “The Art of the Deal” bluff — so now what?

Listen to my unedited thoughts and read the pieces below for more context.

Relevant Pieces

P.S. Remember to join the waitlist for Philo’s Academy at philomastery.com

THE COURSE WAITLIST

Escape the chaos, join the waitlist here. ⬅️⬅️⬅️

HAVING A MENTOR.

This is why you should not think too much about joining the waitlist and following the Zero to Hero investing course.

To join the waitlist for the course, go to philomastery.com and remember to send me an email after you fill out the form! 🦉

Excuse the low-quality sound, but when inspiration hits it’s better to record on the spot rather than pre planned.

When I say Weak Ego I take Robert Greene’s definition which refers to an Ego which cannot take criticism, cannot adapt and is too fragile.

A person with a fragile ego cannot endure failure or withstand pressure — and when it eventually happens, instead of adapting and re-learning, they get derailed and veer off course.

In fact, how you deal with adversity determines your absolute success. The Strong Ego would use that experience to adapt and adjust to reality.

—> “When reality does not conform to your expectations, you adjust your expectations, you don’t double down on delusion.” —Philo

In fact, a willingness to be hyper-realistic creates masters in every craft.

The Power of Revolution

Two examples that I will soon talk more about are:

1. Buffet taking Benjamin Graham’s learnings and making them better with his business-owner oriented mindset and a focus on moats and long-term value creation and

2. George Soros using philosophy as a tool to understand financial markets better relative to myopic economic theories like market fundamentalism etc.

And so, the greats become great through a willingness to innovate and be different. To do things in ways that others do not.

This is what the Traps & Reversals segment in the Investing Course will focus on — teaching the student the situations and conditions where tools do NOT work, and different methods to go about it.

To join the course waitlist visit philomastery.com

Appendix

Mention of strong and weak egos is not meant to upset anyone or offend them, it is merely to remind people how they can do better and what could be causing their emotional confusion or pain.

This isn’t about perfection either, we all lose sometimes, the trick is not to make a habit of it…

“Mistakes are the rule and not the exception when looking back at the career of a successful investor.” —Philo

Mentioned & Relevant

This tweet sums it up quite nicely.

And I wish I could say that I disagree, but this rhetoric has been escalating for some time now. It’s just that Trump is at the forefront now and bombs are falling.

I scheduled a Spaces on X tomorrow after market close to talk about this theme of TRUMP VS THE WORLD, add it to your calendar here.

Trump Pieces on Philoinvestor

—Mario Draghi, 2012

"There is a risk our Europe could die. We are not equipped to face the risks.”

—Emanuel Macron, 2024

My work on Europe etc.

Is the Euro here to stay? ✍️

The Battle for Europa ✍️

First Exit? ✍️

Europe Stopped Dreaming 🎙️

Reading Time: 16 minutes.

I expand on my thoughts on Europe’s decline, what I see as requirements to halt the decline, how I see the future unfolding and how I plan to play it. 3,500 words.

The EUR/USD is at 1.03 and awfully close to parity once again. Europe’s short-term solutions were proven to be just that — short term.

The problems Europe faces are complex and multi-layered, and in this piece we will attempt at isolating them one by one, looking into how they relate to each other and discuss potential scenaria for solutions and how this could play out.

We will continue where we left off, starting from post-Ukraine invasion times where things blew up — mostly in Europe’s face.

Where are we now?

Europe today is like a ship without a captain. We know this because the ship is sailing to nowhere and there is no captain (i.e. political leader) to change its course.

Macron has taken stabs at proclaiming grand ideals and a change of course, but that was probably an attempt to reset his chances of being re-elected while those ideals did not gain enough momentum to make a difference.

This is probably because in one part, those kinds of political speeches are labelled as alarmist and in the other part everyone knows the EU is dying but they are too focused on their own countries to do something about it.

Could that be another EU structural flaw? That the de facto leader of Europe could have conflicts of interest with Europe itself?

The President of the US technically has one country to run, while a political leader in the EU has his own country to run plus politics at the European level.

At the same time, the President of the European Commission is a European national (German, currently), is not voted by the European people but by MEPs — and is mainly focused in spreading her own agenda across Europe while paving the way for future personal arrangements to accommodate herself after she has left the Presidency… Future of the EU be damned!

Granted, politics isn’t perfect in the US or anywhere else for that matter — but the EU is on another level of imperfection.

European politics are further complicated by US involvement in European affairs, mostly to promote their own interests and keep the trading bloc on a leash lest it veers off course and causes problems to American global hegemony.

Yeah, I said it.

The Americans seem to not care that the EU is going through a serious existential crisis with possibly terminal outcomes, at all.

But Europe, if you don’t care for your own self, why do you expect others to care for you?

Europa is losing competitiveness, morale, prestige and her position on the global stage. The Americans need her to guard their interests while the Eastern bloc needs her to promote their own.

The Europeans themselves deep down still believe that they are peak civilisation and that they deserve everything while they still “bank” on the same things they had a century ago.

The results of all this is increased social and political turmoil, changes beneath and above the surface across the Union and a political-ruling class unable not only to keep up with the goings but to rule its people at a basic level.

The results of all this are obvious.

Europe’s challenges span both tangible and intangible — in the former, serious economic and structural issues and in the latter, more abstract cultural, social, political and moral dynamics that albeit result in tangible problems.

The Eurozone economy faces sluggish growth, persistent inflation, and uneven development across member states. The European Central Bank (ECB) finds itself constrained and limited, unable to address the diverse economic realities of its members with a one-size-fits-all monetary policy. Besides, this was one of the EU’s flaws from the outset.

Politically, the EU is increasingly divided. This plays out on the global stage where Europe’s influence is practically inexistent — stuck between the West and the East.

The EU’s inability to project a united front has diminished its influence on the global stage.

Culturally, the sense of a shared “European dream” has faded. Many citizens see EU institutions as out-of-touch bureaucracies that impose regulations without understanding local needs.

Let’s dive in…

When “Whatever It Takes” was not enough

Mario Draghi was deified for his famous speech that “Saved the Euro” in 2012 — but in economics (and especially central banking!) for every thing that is seen there is something that is unseen.

Obviously, markets and people will only see the short-term results while they’ll have to wait around to see the rest! In effect, what Draghi did was kick the can down the road of the EU’s reckless fiscal policies, allowed member-states to spend irresponsibly and stack up more sovereign debt — compounding the problem in the process.

I remember some 20 years ago, when the Euro and the EU was still on the up and up — the narrative was gaining ground that the Euro would outshine the Dollar and that it would become the next reserve currency.

After the European Debt Crisis of 2012 and beyond, the Europeans further pushed the button of bailouts, stimulus and even reforms to keep the Union’s fabric in one piece — but we mostly find ourselves in the same place some 15 years later.

Why?

Brussels, Regulation and the Business Environment.

We agree that the dynamics of business and competition are what drives an economy, right? And so without a vibrant private sector then we don’t have an economy.

Brussels (“the EU”) with its overly strict and top-down regulations and policies that are full of conflicts of interest and excess complexity have managed to kill business dynamism within the EU.

Members surrender sovereignty to the Union when they enter it with the notion that together we would all be better off. Well, it seems that designs on paper are seldom made the same in reality.

In fact, instead of everyone working together for a better collective future, blurred segregation lines started to be drawn where each single member pursued their own interests to the detriment of others.

One would say that this makes sense, countries do compete with each other on the global stage. Yes, but the European idea was built on the foundations of trust and cooperation. When countries start backstabbing each other, then we would all be worse off, the game becomes a minus-sum game.

Basically, domestic politics take precedent over EU politics — and it becomes one big mess. Take the example of energy security which blew up completely after the Russian invasion into Ukraine.

Each country had different relations as well as energy dependencies vis-á-vis Russia — applying a top down solution to that was never going to be optimal. The EU came out with a plan to “Repower the EU” but it was without long-term substance. THREAD.

It’s now obvious that Europe is losing competitiveness because it can’t procure energy competitively enough.

And this saga will be ongoing, especially after a certain someone decide to blow up the Nord Stream pipelines that transported gas from Russia to Germany…

Convenient, no?

The Financial Layer

Weak banks beget a weak economy, and a weak economy begets weak banks.

The GFC of 2008 left the broader banking system permanently scarred (some countries more than others), the EU was forced to create mechanisms to guard not only national banking systems but entire nations!

But Europe (i.e. Germany) dragged its feet for too long before it started to move, and only did so when it realised that “no man is an island”. By that time the intangible layers of trust and confidence had already been considerably eroded…

The Greek banking system was re-capitalised three times, and Cyprus infamously had to undergo through a deposit haircut to “recapitalise” its banking system. Meanwhile, Spain was luckier as it entered an assistance packaged with the ESM.

This lingering lack of trust coupled with no real measures from a united Europe to stimulate the economy resulted in a weak post-GFC rebound — which in turn resulted in weak capital markets. 🔄

The weak performance of investment fund managers post-2008 and the over-performance of the US versus Europe strengthened the hand of passive investing. More capital started to flow out of Europe and into the US, benefiting the US in a cyclical way. 🔄

Europe was left to deal with lagging stock market valuations, weakening competitive positions and an excessive regulatory environment which makes everything harder and less predictable. Super antibusiness.

Techno-Colonialism

European countries may have been the best in the game of typical colonialism, but they suck at techno-colonialism!

America’s pro-risk and future-oriented business culture, common language across the country and largely uniform laws meant it was easier to build tech and expand it across state borders without much friction.

On the contrary, Europe is exactly the opposite: Europe’s investment culture is too traditional and slow, with not much appetite for risk on projects like early-day Facebook and Google.

The gap is clear by now and this is why talent flees Europe for the US. Having political leaders announce incentive schemes to bring them and their tech companies back won’t do anything.

In fact, even if a European founder wants to build something from the ground up he will probably move out of Europe and go somewhere else. The regulate-to-death mentality of Europe and extreme costs to launch and run a business make it practically impossible.

All this vicious cycle creates un-alterable realities that self-reinforce it: The practical inexistence of tech in the EU means there aren’t any big VC funds strong enough to cut big deals with companies in the pre-IPO stage.

This is why even if a European company makes it big (e.g. Spotify), it moves to the US because that’s where the money and the best capital markets are — Europe is slowly becoming obsolete.

Fiscal Sanity and Realism

But even with all these problems and the fact that we are getting poorer (refer to the graphic below👇) with the passing of time, we still believe we should have everything.

We are still banking on success from half a century ago!

European self-entitlement acts like that, European nations act like that too! More context on European debt problems here.

One of the few fiscally sane countries in Europe has also started to throw in the towel under the auspices of the traffic light coalition in Germany. In fact, the coalition failed early November 2024 when the Finance Minister wasn’t willing to “suspend” the debt brake under the requests of Scholz.

Note that former Finance Minister Lindner comes from the FDP (Junior partner in the coalition) while Scholz is from the SPD. The FDP has been tanking in the polls since it joined this coalition — which was one of the reasons I predicted they would eject themselves at some point.

—> Tweets on “FDP” from philoinvestor on X.

Chancellor Scholz wanted to suspend the debt brake to throw money from the treasury into the economy and create an illusion of prosperity, he argued that the debt brake wasn’t needed because German Debt/GDP is much better than the French or the Italian one.

Well, obviously Olaf. But how long can that go? When you have a look at German Debt/GDP you get the idea that all is well in Deutschland… But that’s only because the denominator (the GDP) has been increased by high inflation while the Debt hasn’t gone up by that much.

Great way to stay debt sustainable right? 🥲

When you scratch the surface you see that the German economy has been going sideways since 2019 while the absolute levels of debt have been going up and up.

Real GDP is the same since 2019, it’s inflation that increased it — making Debt/GDP % look just fine. All this while Debt has actually been going up just fine 👇

Government debt trajectories differ by member state but the Eurozone average picture is clear — increasing government debt while productivity is going down.

All these layers working together create further distrust in EU institutions, reinforcing the vicious cycle and the “negative bubble” that the EU finds itself in.

So what needs to be done for Europe to have a fighting chance? How can the European Cycle of Death be reversed?

The Path Forward

— STRUCTURAL REFORMS

— STIMULUS

— LEADERSHIP

This is the ideal scenario: a leader emerges with a clear plan and has the broader public’s backing to move ahead. The European people will be ripe at that point to first understand what is needed and second be ready to go through it.

The plan would be a Make Europe Great Again-style plan, but with a European spin. I’m not sure talks of MEGA (i.e. Europe Greatness) would be convincing to Europeans at large — but there will be a need for leaders to stand behind it.

The Grand Master Plan required to save Europe would go something like this.

1) True Structural Reforms

There needs to be actual competition between member states for things to pick up pace. Putting everyone on a level-playing-field with top-down EU directives and then expecting them to all comply to the T is futile. I think in many instances, each country should choose its own way forward.

Take an example: Investment managers and Funds. Brussels and EU Regulations in that sector have killed that business with their complicated regulations and costly compliance structures.

The Master Plan should focus on de-regulation and a facilitation of business. If it does that, business activity will pick up and gain momentum.

Regulating for the sake of regulation — which is something Brussels is definitely guilty of, is a dead end.. I am sure you agree that the attached plastic bottle cap and endless “Accept All Cookies” popups whenever you visit a website isn’t exactly innovation. In fact, in typical EU fashion, it mostly results in a waste of time and resources.

I for one have managed to spill water all over the seats in my car because the attached cap makes it difficult to seal the bottle well, and anyway no one ever reads the disclaimers about cookies!

Imagine how much low-hanging fruit there is to work on in sectors of the economy that actually matter.

2) STIMULUS — The Differential between the EU and the US

The thing with stimulus is even if one could argue it’s wrong economically, (unintended consequences and all) you have to do it just because everyone else does it. It’s like a stimulus race!

And the “stimulus differential” between the US and the EU since the GFC has been massive. The Americans freely stimulated their economy with generous monetary policy and lax fiscal spending while the Europeans basically did the opposite.

Why, Philo?

Monetary policy and stimulus was only executed to pull back nations from the edge of the cliff. Fiscal policy was only extended for to keep “socialism” alive..

So while the US was using those two levers of stimulus to strengthen their economy and extend their economic supremacy lead against the rest — Europe was merely dragging its feet hoping to stay alive..

WHAT DID WE EXPECT???? 🙄

So, how can Europe bridge the gap now?

THE EUROPEAN BAZOOKA! 💥

• FISCAL

Every country has to fiscal spend a certain amount of GDP every year towards purely growth investments. They can find the money from somewhere else or cut spending that has a negative ROI to make up for the budget shortfall.

—> This will not only be a structural and political requirement, but something backed by the people’s of each country. If there is popular backing, it will happen with no excuses.

• MONETARY

To opine on a monetary policy route is harder because it depends on how markets react — the Euro, Sovereign Yields, Inflation etc. But the ECB together with EU Institutions must have a pro-growth mindset and backstop big and transformational investments with their balance sheet…

What?!?!? Buying bankrupt sovereign paper to bail out the Euro is somehow better???

3) LEADERSHIP — We have Zilch.

But nothing can stick without the secret ingredient — leadership and an overwhelming sense that “we” are going places. It’s the ingredient that will make everything stick.

EU member-states must realise that “no man is an island” and that they must reverse their strategic retreat from the European Project (and Dream) if they want to see it survive.

UNTIL I see this happening, I will remain deeply skeptical about any major recovery in Europe. Yes, there may be attempts to stimulate the economy with measures like the ones taken in China last September (Piece here) but I think the recovery will eventually hit a wall.

BRINK AND BANK

This is a recurring mental model we talk about here on Philoinvestor — which I learned from George Soros. It reasons from the POV that our rulers only muster the political will to take DRACONIAN measures only when we go to the brink.

And when that happens, we move back from the brink. This can be a very profitable setup when you trade it properly.

—> More context on brink and back from my Soros piece here.

Are we approaching the brink in Europe? HOLD THAT THOUGHT 👇

The EU as a vassal of the United States

Excerpts from Battle for Europa

The EU went from having an unfair but acceptable hegemon (Merkel) and a semi-sustainable direction — to having NO hegemon and a self-destructive direction.

Today, the people of Europe disagree with the path the bloc is taking, and they are expressing that in the polls.

This rhetoric of escalation is not benefitting Europe one bit. Europe’s combined military capabilities have been on the decline for decades while the fiscal situation of the Euro Area is too weak to handle a ramp up of military spending.

Excerpt from Europe Stopped Dreaming 👇 commenting on this thread here.

Does the war in Ukraine and the broader conflict with Russia benefit Europe? Absolutely not. Is said conflict tearing Europe apart? Absolutely.

Then why is Europe going ahead with it?

Europe has been turned into a vassal by the US and is being pushed around. The US doesn’t care what happens to the EU and Europeans (that should be obvious by now). Europe will eventually implode if it doesn’t stand up to the American bully.

And so this viral thread on X here forgot to mention this basic conflict of interest, that the US doesn’t want a strong EU at par with the US. And until the EU stands up to the US, nothing will change.

Note: I wax political not because I want to — but because the political layer is vital to understanding the matter at hand.

Once we realise that imperfect understanding is the human condition, there is no shame in being wrong, only in failing to correct our mistakes. —George Soros

CONCLUSION — TL, DR.

And so yes, Europe is approaching the brink — but I am not sure if Europe (or anyone in Europe) can/will do anything to pull us back from the brink sustainably.

The European ship has too many anchors pulling it down, and if those anchors aren’t removed — this ship is going DOWN.

In the meantime, I remain super bearish on the common currency and stay intellectually open in seeing it drop much further. I see no European Messiah in the horizon and will re-assess my thesis when I see things changing.

Having said that, I expect catalysts to come out of Europe within 2025…

We will be here for them.

Sincerely,

Philo 🦉

“You can't connect the dots looking forward; you can only connect them looking backwards. So you have to trust that the dots will somehow connect in your future. You have to trust in something - your gut, destiny, life, karma, whatever. This approach has never let me down, and it has made all the difference in my life.”

—Steve Jobs

Innovating with Philo’s Academy

What we’re going to design and integrate into the course won’t be exactly how Robert used REVERSALS in The 48 Laws of Power, but a twist to that.

Wherever applicable I will give examples of where a particular teaching or generally-accepted investing notion or concept doesn’t work well / breaks down and offer better alternatives to it.

Furthermore, I will explain how I personally go about things — including ways I have innovated and made a certain tool better over the years.

I have already started writing the “Traps & Reversals” down after each module — and I am discovering more ways I can help you learn vicariously from my own and the experiences of other investors.

We will use the Case Studies segment within the course to apply the things taught in traps and reversals.

That’s where we will apply all the teachings we have learned as well as see in real life how a particular teaching breaks down and why the reversal would work better. I see this as Applied Real Life Investing.

This is a game-changer for the course dynamic and gives it extra value and life. Everyone can learn from this — I have zero doubt.

Join the waitlist by visiting philomastery.com.

Sincerely,

Philo 🦉