As of late, I have been intrigued by Japan. It is a part of the world that investors seem to detest ignore, despite signs of technical improvement.
Iâ??ve talked about this in the office, and with some of our clients who either own specific Japanese names â?? or live there. The thought process is Japan is a potential surprise in 2011.
I first spotted this on FusionIQ; The reason was due to it flipping back and forth between a Neutral and a Buy in October. The EWJ chart is VERY interesting chart â?? much more sop than the Nikkei Dow; EWJ is in a nice uptrend that slipped over its the December 2009 highs earlier this month; It just got over its April 10 highs this week.
Here are 10 Reasons I want to own some Japan for 2011:
10 Reasons to Think About Japan
1. Everyone hates Japan as an investment â?? widely disliked for its bad demographics, aging population, ongoing MULTI-DECADE recession.
2. The chart! Nice uptrend, new highs.
3. Institutionally and on Main Street, japan is VERY under-owned.
4. The island nation is still the 2nd biggest economy in the world in real (not nominal GDP) dollars; they are a huge exporter, and industrial powerhouse.
5. Proximity to China: As it grows, Japan has easy access to even cheaper low end manufacturing. The high value engineering and design work stays in Japan, but the toxic smokestack industry moves to the mainland.
6. Improving global economy could help Japanâ??s export business.
7. If China rescues Europe, Japan benefits;
8. The country has shown long term resilience to misfortune â?? the only nation to be nuked â?? 2X!)
9. Modern infrastructure, highly educated, excellent work force; forward thinking gadget-head consumers.
10. Consumer prices are anticipated being flat next year â?? the 1st time after 3 years deflation.
And did I mention I like the chart ? Note how many times EWJ got turned back at $11. What would get me really excited was a high volume breakout over $10.90-11.
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Last time I heard Marc Faber on Bloombeg he spoke favorably of Japanese equitiesâ?¦ So thatâ??s good tooâ?¦
tks for reminding me: just sold a mini yen on my roth for you:
as long as the yen remains strong, japan canâ??t exit its hole given it being heavily export oriented. but it will happen: with the largest debt/gdp ratio in the civilized world (200%), and an ageing and old pop, govt revenues are low and going down, govt expenses are high and going up. they will print their way out of this, currency will colapse.
question is not if but when.
You forget that this is payback time for China. The rape of Shanghai and all of those years, even to today, of Japan denying their WW2 atrocities are now coming due. They donâ??t have to do business with Japan with all of the alternatives close by, and, without any kind of military to speak of, the Japanese are literally a sitting duck out there in the water. I really doubt the western world will put up much of a fight to come to the rescue.
This is excellent â?? great contrarians donâ??t buy whatâ??s hated, they buy whatâ??s ignored.
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BR: Thatâ??s really the better word â?? Iâ??ll change above
Japanese equities produce choppy indexes that for whatever reason â?? manipulation? â?? just donâ??t trend properly. Breakouts fail, as do breakdowns.
As the charts show, itâ??s a long, volatile exercise in going nowhere.
Fractional interest rates are the only thing keeping Japan on life support. If nominal rates ever start to rise, Japanâ??s interest bill will â??go exponentialâ?? and snuff the life out of its economy.
Economically, China is to Japan as the US was to Britain in the 20th century â?? that is, outgrowing the earlier leading nation. Britainâ??s special relationship with the US didnâ??t help its equity performance in the 20th century, nor is Japanâ??s proximity to China likely to be much of an advantage. Less-developed Asia â?? e.g., Vietnam â?? has far more potential to ride the Chinese growth wave than Japan.
Japan was the first into the rabbit hole, and will be the first to emerge from it.
Eat me.
i went to Tokyo recently, blew me away, their country is sooooo advanced. Especially in Robotics, and there might be a market for robots. Also I read once a few years back that Japan financed alot of Chinas boom. Somewhere Japan provided early money, got equity, contracts etc. 10 years ago China was not rich and Japan was, relatively speaking. As China gets more expensive and automation increases I think Japan stays competitive w China. In fact, I think Japanese have greater attention to detail than Chinese in their products. And Japan is a Western country, China is still communist, and playing nice with N Korea. Japan loves the West, China not so much. I generally prefer Japan over China. Even in culture, Harajuku and Manga is popular with everyone under 25. Japanese get technology and understand it fundamentally, Chinese are still mostly farmers. Nuffâ?? said
Also recently Japan Govt has openly declared that they will Japan stock market by investing itâ??s sovereign funds ! No wonder EWJ is making waves!
genomik Says:
"In fact, I think Japanese have greater attention to detail than Chinese in their products."? _____________
Any photography bug knows that a lens made in China for a Japanese company is inferior to the same lens design manufactured by the same company, but in Japan.
A friend of mine runs a glass factory in China. He does not have very good things to say about the quality of the work done by his until-recently peasant workers.
OKâ?¦I am not anti- your pick here. BUT, as the senior analyst for the American subsidiary of a major Jampanese Import/Export Company let me give you a little anecdotal advice. I spent 2 weeks there at a managment workshop in Tokyo back in June. IT was lovely and I would go back again.
1)Everyone hates Japan as an investment "â? widely disliked for its bad demographics, aging population, ongoing MULTI-DECADE recession.
Thes reasons to hate Japan are well deserved. AND they are not going to change anytime soon. At economic meetings held within our country, I am privy to reports our management generates in Tokyo. The end result, THEY DO NOT BELIEVE ANY OF TIS IS GOING TO CHANGE IN THE NEXT 20 YEARS. Their goal is to find ways to profit from this, NOT to find ways of crating long term business ideas outside of Japan. Too many companies in Japan are happy with the status quo. You need to remember they aer a very proud people. Culture and Loyalty means everything to them. They are not one for change. THEY DO NOT ADAT WELL TO CHANGE.
2) The chart! Nice uptrend, new highs.
Sorry Barry, but the chart looks more like an advertisement for Trendtrader.com. (And I donâ??t mean to be offensive by that)
3) Institutionally and on Main Street, japan is VERY under-owned.
There are reasons for them to be under-owned and un-loved. Most of it starts with their government. Constant state of flux. Japanese companies design business plans around tax policy. They need a long term solution when it comes things like this and it changes all too often. Although, some recent tax decisions are very positive for Japanese companies and counter my arguement for the last 3 years that the head quarters should be re-incorporated as an American Company. With our HUNDREDS of subsidiares around the world we could tke great advantage of tax laws and not bring back the profits to America. In Japan, all profits come home��it kills them to do this, but again�back to loyalty to mother country. I figured if we could get the company to re-locate, maybe we could get a change in direction as well.
4. The island nation is still the 2nd biggest economy in the world in real (not nominal GDP) dollars; they are a huge exporter, and industrial powerhouse.
I need to correct you here a bit. They are not as big an exporter as you think. They have set up subsidiary companeis and JOINT-VENTURES around ASIA. They are big into the Joint-ventur thing. Very little is actually produced in Japan anymore. EVERY THING sold by Japanese companies (finished products atleast) are made in Asia, but necessarily in Japan. Japan is more of a materials supplier now.
5. Proximity to China: As it grows, Japan has easy access to even cheaper low end manufacturing. The high value engineering and design work stays in Japan, but the toxic smokestack industry moves to the mainland.
5) Personally I hate this point. China has turned Japan into thier bitch. As of rht industry moving to China�.Have you been in to Japan. Very few young people are working right now. They are exporting their manufacturing system out of the country. That did not work well for us her ein the states, and will not work well for them either. Imagine that��Japan taking a page out of our workbook.
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