Shares of German automakers have stopped falling despite the continued stream of bad news from the industry.
There’s so much negativity already priced in that even Volkswagen’s latest earnings forecast cut is being interpreted roughly like this: things are so bad that from here, they can only get better.
Should you buy them? My view - no.
Yes, they’re cheap. But who says they can’t get even cheaper? Or that they’ll outperform the broader market in the years ahead?
Markets are about making bets. So why bet on industries whose prime is already far behind them?
You don’t think about investing in steam locomotive manufacturing, gas lamps and city gas lighting, zeppelins, or teletype machines.
Why should the auto industry be any different?