The best investment options in Germany

Despite Germany's uncertain economic outlook, investors stand to make healthy gains by diversifying and sticking to good, old-fashioned value stocks, says Swen Lorenz.

Back in the late 1980s and early 1990s, the rest of Europe saw itself as being dominated by the seemingly unstoppable German economic locomotive. Germany's central bank, the Bundesbank, set the tone of European monetary policy. German export companies were raking in the cash by selling its "Made in Germany" brand to the rest of the world. And the public finances were healthy. Less successful European economies often had the feeling that the Wirtschaftswunder country was looking down on them, as Germans enjoyed the best standard of living of all the major European countries.

But it's been a long time since Germany had reason to feel smug about its economy. The attempt to rebuild East Germany with government money after reunification hammered the public finances and misfired in many cases. Persistent resistance to necessary structural reforms of the country's famously strict labour laws, for example caused an exodus of entrepreneurs to the likes of Switzerland or the UK. Other than software giant SAP, not a single newly formed German company has made it big on the international stage for at least two decades. Between 1990 and 2005, property prices went nowhere and, in real terms, actually fell back to 1975 levels.

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