Hence bleak economic times for the European economy seem to be in order. Now given that the economy is not expected to do well, what do we say about luxury stocks such as Burberry? In times of recession, it is the luxury goods that get hurt the most. Its human psychology. Whenever, we are in financial trouble, we cut our expenditures on luxury goods. Those 200 bucks we were going to spend on a designer bag will quickly be put under the pillow for the bad times that are expected to come ahead. Given that Burberry is a purely luxury brand, this does not spell out too well for the company. The company has already seen a great contraction in its share price over the last week as the company has lost nearly 10 percent in value. Maybe the investors have just become aware of the effect the recession might have on the luxury brand and have started a selloff. Given the European economic situation and the fact that it is only going to get worse, I recommend that that Burberry be SOLD.