Greetings from Berlin, Germany, where I am on holiday. What I’m seeing here could affect your portfolio in the U.S.
Here’s what to avoid and what to buy…
On the Unter den Linden, the wide venue that cuts through the middle of Berlin, you can sense history; sadly, most of it is painful.
Hang a right on Freidrichstrasse (assuming you’re walking away from the Brandenburg Gate), and you’re on Berlin’s 5th Avenue. No pain here, right?
Think again. In this venue is a huge, beautifully appointed Volkswagen showroom, and stores with clerks that tell me business is just so-so.
First, VW. What a bloody mess. I’ve received many emails asking me if VW is now a buy.
No. Stay away.
A couple of days ago the EPA filed its first legal action and potential fines could theoretically put VW in bankruptcy. That won’t happen, but the legal stuff will overhang the company for at least five years.
Why so long? Germans. They don’t do anything except on German time, which is slow-motion time (which is a lot slower than US or British time).
I repeat: stay away.
Second, the refugee crisis had an undue impact on German consumer spending and, strangely, business investment. Not because of the refugees, but the uncertainty surrounding the political situation and the future of Chancellor Merkel.
Here’s some positive advice: The European Central Bank will continue to ease through 2017, and that means the indices here will go up
Also, ECB easing means a weak euro, and that means more tourists and travel. Simply put, all airlines are moving a lot of people here and the tourist business is expected to boom.
So, what to buy?