Helsinki Helsinki Helsinki
Whats up dear old friend
Is Helsinki poised for a remarkable resurgence? No.
I have also been highly critical of Finland and its companies. Still, Finland has many great people and beautiful companies.
Positives in Helsinki:
Helsinki is a boring index with many cyclical companies. It’s like a flashback to the 1970s. Is this necessarily a bad thing?
Some companies are still super strong and are very competitive.
Finnish companies did a lot of business in Russia (not anymore)
Believe it or not, Russia will be a big opportunity again in the long run. It is unthinkable now, but after five years? 10-years? (Btw Finnish companies did not do good business that much in Russia)
The risk of Russia is also wildly overstated at the moment.
The major players already compete globally and have the majority of their business abroad.
It is unique. We should embrace this kind of uniqueness.
It is not a gambler’s paradise with boring businesses and low volumes. (Like the rest of the markets)
Is there any downside left? I mean, it looks like it is already pricing in WW3 and the global recession… Sure, there will be 20% more downside in a black swan event. But that is a lot less vs. the hype shit and growth companies around the world. You need a balanced portfolio.
"Never bet on the end of the world, because it only happens once, and even if it does, who are you going to settle the trade with? - Art Cashin
Maximum stupidity and gambling will eventually end, and suddenly, it is nice to own some companies that have strong balance sheets, good cash flows, moats, and overly sheepish attitudes, reporting everything and doing everything by the book.
AI is overhyped now, but in the long run, it might also help these traditional industries achieve at least some efficiency and productivity in Finland (hopium).
Helsinki's peak fear and pervasive doomerism will eventually give way to a spring of modest hope.
There is a place for a small allocation to Finland, be it in one company, the omxh25 index, or some fund.
I have owned UPM since the early 2000s, and I continue to do so; I even bought more when the chairman of the company bought more at 28-30. Was it a good investment? I gambled with NVIDIA, PLTR, and Coinbase and did wonderfully, but is it the shit I want to own for the next decade? My solid foundation base?
Many get this wrong.
Finnish small investors over-allocated to Finland.
C'mon, you already have a home and work here; max 10% is just fine.
The rest of the world is currently just gambling.
C'mon, you need a piece of Finland.
A portfolio needs a solid foundation, and the Finnish stock market presents exceptional opportunities to construct one.
We can throw the old portfolio theories out of the window. It is all about confidence nowadays, catching the momentum, going against the herd, having conviction, and just some idea/thesis to follow. What you need for a cocky confidence? Solid foundation. This is due to the fact that most are passive investors, while others are extreme gamblers. The key is balancing confidence with caution, and momentum with a solid foundation if you want to be a player.
Negatives in Helsinki:
CEOs, management, and owners got too lazy in some companies.
Top-tier CEOs peaked in the early 2000s, so why are they still around? The same can be said for the boards.
There are bigger regulatory and political risks (This risk is also high in other developed countries, such as Canada). Again, Finnish companies follow the law. Even if it harms them or is a useless policy, they still “do it.”
Bonus: Finland is already a very socialist country (even if we have the most “right-wing” government at the moment). How bad can it get in the future?
Finnish companies swiftly exited their Russian ventures in response to the situation, in contrast to foreign competitors who continued circumventing the sanctions… (Not all, but plenty did).
Fiscal dominance globally can disadvantage Finnish companies, even though they operate internationally, and they often see subsidies and deals favor domestic players.
Finland already has massive subsidies for companies; this won’t certainly grow in the future, only downside from here (At least in Finland). USA,GERMANY, etc. subsidies, on the other hand, keep growing…
Innovation stagnation.
Heavy reliance on traditional industries.
Demographic challenges (a problem also in many other countries)
It is hard to find a good workforce (highly educated). Also, Finland is riddled with zero labor efficiency. This used to be our most significant competitive advantage.
Brain drain: Talent will go abroad. Is the pinnacle of ambition here really to crunch numbers and obsess over margins in, for example, pulp and paper?
Capital drain: Why invest here? Even the most prominent companies here in Finland invest abroad… Taxation will only increase. Capital goes there where it is treated the best.
In the past few years, investments have only been in real estate. The same is true for the majority of the wealth held by Finnish people, who are tied to the walls.
Helsinki has done very well in the past; do I expect that to continue? Sadly, no. Finnish small investors are joking about the bad gains, and they are still in hopium mode. “It will get better.” Why? How? When? What is your big picture? What do you try to do owning a piece of Finnish company?
Everyone in Finland, along with its stock market, needs a humbling experience—a reality check to ground expectations and optimism. Wander the woods for 3-4 days, cry your eyes out, and find your why. It feels like many in Finland are missing out on the why. Why do you invest? What are your financial goals? What are you trying to achieve?
Too often, the answer seems to be a shrug and a mumble: “I invest because that’s what people do.” “Hopefully, it amounts to something; otherwise, the government will bail me out anyway.”
Go fucking update your spreadsheet and paper wealth. It is okay if your goal is to achieve almost nothing. Get mad, for fuck sake.
Finland's past five years have been abysmal, and I expect this to continue. The worst option is zero or measly nominal gains for decades. The saddest part is that these delusional small investors in Finland think it is the right thing to do, and they expect a reward.
You can succeed in investing only in Finland, but it is like playing in a nightmare difficulty.
Best picks 5y:
Both are great stories.
Excellent performance in the last 12 months.
What I like at the moment:
I have always liked UPM, a solid “boring” business. I own UPM. Jussi did such a wonderful job with Nalle, so it will stay strong for a while, no matter what.
On my watchlist:
GOFORE: has performed solidly despite the weak markets. Management has done a good job (this is rare in Finland).
Lapwall: It is hard to see that the craziness of the Finnish dream of owning their house would vanish any time soon. The Finnish construction industry is in big trouble; Lapwall is surviving, a sign of quality. Good management: the CEO looks like a smart guy and knows the industry well. In the next run, it has all the makings to be the next Finnish stock market darling for small investors like QT-group, Revenio, and Harvia in the last run.
Revenio: Tonometers! Eye health. Very healthy company with small liabilities. Awesome growth in the past. Was it driven only by Covid madness? The megatrend narrative is possible. As a hidden bonus, it is a highly likely candidate for a buyout if the stock performance stays stagnant. Great story! Can it propel to the next level?
Nokia: The pain and bleeding continue; when will it reverse? Let's wait until the Finnish small investor throws a towel to the ring on this one completely, and the management is changed.
Fortum: I like energy. Can they focus on the basics after the mess with Uniper and Russia? I want to own energy for the next decade.
Metso: One of Helsinki's best-kept secrets. Metals? Commodities? Batteries? Pick-and-shovel play?
Stora Enso: Boring and beautiful. The new CEO is good. The balance sheet is strong. Does the future hold promise for satisfied Stora Enso shareholders?
Neste: Bottom is in?
Puuilo & Tokmanni: Just look at their web pages; who the fuck buys this shit? Apparently, somebody, to my surprise, they are growing and are profitable selling this shit. This is the ultimate depression consumerist mindset bet. In today's world, the best value plays are those that stand to gain the most from a general decline and pervasive “dark narratives.” In 5-10 years, I hope we'll be reminiscing in the sauna with friends, laughing about the kind of junk stores that thrived at the height of the depression. Or will the depression continue?
What not to own?
Bank stocks. The Finnish herd is currently screaming Nordea: With a high dividend yield and a P/E under ten, what's not to like?
OMASP & Bank of Åland also did well.
It's hard to see any massive upside; where does the growth come from? Yes, Nordea is a beautiful company, but is it wonderful to own? Overly sheepish will backfire eventually. What will happen to banks in the EU? What direction will the EU and Finland develop in the near future? Does the regulatory environment loosen? Is the permanence of net interest income prints guaranteed to remain unchanged forever?
It’s hilarious: “bank stock fans” call Bitcoiners delusional, yet Bitcoiners are the first to admit it. Who’s really fooling themselves here? Meanwhile, the same fans preach their “up only forever” mantra, as if bank stocks are immune to the same risks.
Are you investing in bank stocks now because everyone else is comforting you? Are you running out of ideas? The story always ends in tears when banks are the safest and highest-quality investment… The lost decade ahead? This is an excellent example of how common sense and economics are generally broken?
Poorly managed companies, stay out of them! There are a lot of those in Finland.
For example, Oriola? They have had all the prerequisites for a profitable business. They should have made a shit ton of money, but nothing, just disappointment after disappointment. Wrong decision after bad decision. The stock performance tells the story. The turnaround is coming… Then it is despair again. Can the new CEO do something?
Bonus tip for surviving in the Finnish market: Follow what insiders are doing, whether selling or buying. If management does not have skin in the game, don’t bother. What are the small investors buying or selling? What are the foreign investors selling/buying?
So what the fuck?
Finnish stocks ≠ Finnish economy.
The game is to buy low and sell high. Being a player in the Finnish market is like playing with nightmare difficulty. You need a plan, and you need to be vicious. With hope, you don’t get far anymore in Helsinki. What worked in the past just mindlessly owning Finnish companies won’t work in the future.
The big picture is that the Finnish stock market will perform poorly for the next decade.? There are still beautiful companies to own. What would get foreigners excited about the Finnish stock market? What companies can grow in the future? What companies can compete in the future? What companies are profitable even in the future?
Buy quality at a bargain. Buy companies you would like to own 100%. Don’t just throw your savings randomly into Finnish companies. (If you find yourself collecting different Finnish companies, stack the omxh25 index instead.)
While the general market sentiment might be depressing enough to warrant a look, there's not enough blood in the street to buy this shit in frenzy mode.
Stay hard and stay strong.
Background: I have owned only a handful of Finnish companies: UPM from the early 2000s, Okmetic (which I was forced to sell, was acquired by a Chinese company), and Olvi (Sold when I stepped away from consuming beer). Why? My relationship with UPM started purely because my neighbor gave me a few shares as a confirmation present, and my friend’s cool dad worked there. My finance professor’s insights influenced Okmetic… Olvi, simply because owning a part of the company added a special touch to enjoying a cold one in the sauna…
Additionally, I've explored investments in numerous other Finnish companies, often spurred by recommendations from well-respected friends. Typically, I throw one one-month grocery bill into it to have some skin in the game, do a thorough diligence, and ask myself, do I want to own this 100% and own it for a very long time?
I already run my business and raise my kids here, so there's no point in going all-in on Finnish markets. Therefore, any further investment in Finnish companies requires a substantial margin of safety.
I keep a close eye on the Finnish markets, especially UPM. Give me one solid reason, and I won’t hesitate to sell.
Other writings about Helsinki:
