Preconditioned to “buy the dips” and capitalize on special situations, millions of investors have picked up shares in Volkswagen AG (VLKAY) with the hope of making a killing on the rebound.

I think that's a mistake.

No doubt special situations can create huge profits, but what's happening now with VW stock is very different and poses special risks other “turnarounds” don't.

We're going to talk about that today and, while we're at it, take a quick look at the trade recommendation I gave you last week to play the situation.

It's returned 15% in just eight trading sessions and is primed for a whole lot more in the months ahead.

How much more?

Nobody knows for certain, but taking our cue from other winning recommendations like Raytheon (RTN), Altria (MO), and FleetCor (FLT), which I've recommended over the years under similar circumstances, there's clearly double or even triple-digit profit potential.

Here's what you need to know.

Newly Designated VW CEO Hans Dieter Poetsch Agrees with Us

I minced no words when the VW emissions scandal broke, calling the situation “an extinction-level event.” Others didn't see it that way, and I got my fair share of emails from those who thought I was being too harsh.

Now, millions of investors are coming around as the plot thickens and more information comes to light about just how damaging the situation actually is.

Two engineers, Ulrich Hackenberg, Audi's chief engineer, and Wolfgang Hatz, a Porsche Formula One engine whiz, are being painted as possible culprits. They were “under pressure” to come up with a viable solution for strict u.s. markets, goes the story.

Call me crazy, but that sounds like lawyers in overdrive who are going to try to position the engineers as hardworking good guys who simply took a wrong turn in the pursuit of continued excellence. It's a feeble attempt – in my opinion – to deflect potential damage away from VW itself.