I am a US citizen living in Germany and I want to open a portfolio account in the US. I use my sister's US address as my mailing address. Can this also serve as my permanent US address (which, I'm told, is required to open the account)?
I would argue that you can. Being a US citizen, you're taxed on your earnings, so from the US-bank perspective the address is just a place to send the mail to. However, if you're also a German/EU taxpayer - you should check their laws and regulations wrt reporting of gains and tax payment.
From US-tax perspective it will be better for you to keep your investments in the US. Foreign investments are taxed more aggressively and at higher rates by the US.