Japan - Anyone bullish out there?

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ringledman

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Japan. Anyone bullish on the country?

I'm talking equities?

Personally I am happy with a nice 5% allocation.

I don't expect it to do much over the next few years but think it will be a good long term performer over 15-20 years.

25 year bear market and stocks at 0.7-1 times book cost, does it get any better than that for a value investor?
 
I've looked into Japan on and off for a few years, but have not been convinced yet. One thing is the Return on Investmet/Book Value is quite low for most companies in Japan. The other thing is that their government likes to actively stimulate certain areas of the economy, and the cash for the stimulus is either borrowed or created. Japan also has a trach record of active currency exchange intervention, which does add to the currency risk.
Your statement on the price to book value is interesting, I haven't looked at Japan in about 12 months so I may need to do some research over the holidays. What I would be interested in is a Japanese company predominantly exporting to China and the rest of Asia, avoiding US and EU.
 
ageing population in japan. interest rates at record lows and still no growth. rates will rise to match high inflation driving economy to further recessions
 
spursman said:
ageing population in japan. interest rates at record lows and still no growth. rates will rise to match high inflation driving economy to further recessions
Click to expand...

These items are priced in I would suggest, making Japanese equities the only really undervalued market in the world.

Inflation is probably the best thing that could happen to Japan's markets. Faber reckons the Japanese who love their bonds will pull the money out and into the stock market once inflation starts.
 
Ringledman (where did that name emanate from?), I think you sumed it up well yourself. It is one of the cheapest markets in the world on the measure you put forward (price-to-book value). Outstanding value in any asset or market is a pre-condition for a long-term bull market. But as other contributors rightly point out, the return on equity is low and we all know the economy has problems. Nonetheless, the contrarian loves a cheap market, downside low etc. I like Faber's view outlined above, and he has got alot right this decade. 'Intelligent' ETFs are the best way in for a long term investor in my view. Powershares has one quoted on the London market. If you want to learn more about Intelligent ETF's, I have an investment note on my website www.investRcentre.com

Rory Gillen
 
ahh the name, its a long, long and rather wierd story of misspent youth!

Cheers for the link will check it out.

I just think Japan offers a nice uncorrelated allocation as part of a well diversified portfolio.
 
Thanks for the information Ringledman,

I have put the top 3 mega banks of Japan on my watch list, their trend is down currently however I will act as soon as an uptrend signals.
 
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