volkswagen sept 21 2015

This is Volkswagen as it trades in Frankfurt in Euros. The 52 week range was from a high of E254.99 to this morning’s low of E126.70. The high was on March 17, exactly 1/2 year ago. That is down slightly more than 50%. Today’s move alone was good for 23%.

The cause today is no doubt related to tinkering with the engine computer system in order to give better, much better, readings when emission control tests were conducted, but clearly there was a lot more going on well before this latest revelation. Volkswagen, the World’s no.2 automaker has been trying to grow at a very rapid pace in the US market. It has been a very ambitious goal which has allowed the company to stray from the straight and narrow much like a Tour France cyclist using doping.

The message, of course, is that we are entering a bear market because the mood is bad. What might have been tolerated in upbeat times will not be condoned today. A policy of growth at any costs invites these moral infractions , as it blinds management to all the other things that are important.

In EW terms I suspect that we are in some 3d wave so there is more, perhaps a lot more, to go.