The thesis
“European defence stocks since 2015.”
How buffet read it
$10,000 split evenly between a US aerospace & defence ETF and a broad European equities ETF.
2015–2026.
Rebalanced annually.
Dividends reinvested.
Benchmark: S&P 500.
ITA 50%, VGK 50% · 2,931 trading days · benchmark SPY
$10,000 became
$0
The same money in the S&P 500 would have been $45,379 over 2015–2026 — the thesis came up short by $10,249.
The worst stretch
−44.0%, February 2020 to March 2020 — you would have sat through one month of that, and it took until March 2021 to get back to level.
the S&P 500 fell 33.7% at its worst over the same period. The thesis moved 18.8% a year against 17.6% for the index.
Where the thesis was wrong
The thesis lost to the S&P 500 by $10,249 over 2015–2026, finishing at $35,130 against the index's $45,379. The construction was also a poor fit: VGK is a broad European index, and European defence names are a small fraction of it, so the thesis was never really run. The worst year for the gap was 2020, when the thesis fell −4.0% while the index returned +18.4%. The drawdown in early 2020 reached −44.0%, deeper than the index's −33.7%, and took until March 2021 to recover.
Counter-test
Same money, same schedule, parked in 1–3 month T-bills instead: $12,507.
Year by year
| Year | The thesis | SPY |
|---|---|---|
| 2015 | +1.4% | +1.3% |
| 2016 | +9.9% | +12.0% |
| 2017 | +31.2% | +21.7% |
| 2018 | −11.0% | −4.6% |
| 2019 | +27.7% | +31.2% |
| 2020 | −4.0% | +18.4% |
| 2021 | +13.5% | +28.7% |
| 2022 | −3.0% | −18.2% |
| 2023 | +17.1% | +26.2% |
| 2024 | +8.8% | +24.9% |
| 2025 | +42.2% | +17.7% |
| 2026 | +10.4% | +13.4% |
What this verdict does not include
- US-listed stocks and ETFs only, priced on end-of-day closes.
- No tax, no trading fees, no slippage, no bid-ask spread.
- Dividends are reinvested, because closes are adjusted for them.
- Survivorship is not corrected for: only instruments that exist today are held.
- Only 12 years of history exist for this. Read it accordingly.
- No dedicated European-only defence ETF exists in the catalogue. The thesis is approximated with ITA (US Aerospace & Defence, which includes major Western defence contractors) and VGK (FTSE Europe, which provides European equity exposure including European defence names such as BAE Systems, Rheinmetall, Leonardo, and Airbus).
- VGK is a broad European index, not a pure European defence fund; European defence names are a minority of its holdings.
- A pure European defence basket (e.g., EUAD or DFNS) is not available in the catalogue and cannot be run here.
Keep this thesis
buffet re-runs it once a month and mails you the new number. Nothing else is ever sent.
Another thesis
Every verdict names something it could not test. That gap is usually the next thesis.
Run another thesis — $5