There is a continuous debate between analysts and investors who take into account different figures in order to decide where to invest: some prefer to obtain details about the turnover, the returns, the evolution of the demand in the sector, amongst others; some others prefer to analyse the evolution of the chart in the exchanges. Fundamental and technical analyses are the main systems for investors to try to know if the share is right to invest. But what if there is a sudden management mistake? What if the managers have lied in the business?
Volkswagen is a new case of wrong management with hard effects on the exchanges. The manipulation of the car engines with a software to cheat in the CO2 emissions was something unexpected, because markets accept that companies are doing a fair competition, that they are showing real figures of their business… In other words, trust is the base of markets and investors. If we look at the T-Report of Volkswagen, we find that the evolution of the share was not positive in the last year, but there is a hard break in September:
A comparative analysis with Eurostoxx 50 shows also this break in the trend:
Another chart points out the relative position when performance and volatility are linked:
Finally, all models show a deep negative trend in the future evolution:
The question is: what can an investor do? Unfortunately, no model and no analysis can preview unfair management before the truth emerges. The history of false figures or manipulation is long: Toyota and General Motors also hid defects in their engines, Enron or Gowex manipulated their balances and the profit and loss accounts… The court is the only solution to try to recover some of the losses in the investment. Volkswagen knows it and that is why the company set aside 6.5 billion euros to deal with the long demand list for damages, not only by consumers but also for governments. However, there is a bigger damage: the shadow over an industry.