Interesting cover on Barron’s this week:

This is hardly a contrary view — I’ve heard from lots of people saying they are doing the same thing.

As mentioned previously, stick with the small cap funds (DFJ, SCJ, and JSC). The large market cap ETF (EWJ) is not the ideal investment for the bounce back (already underway)

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Source:
Invest in Japan
LESLIE P. NORTON
Barron’s MARCH 19, 2011
http://online.barrons.com/article/SB50001424052970203757604576204523501069008.html

Category: ETFs, Financial Press, Investing

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

25 Responses to “Barron’s: Buy Japan Now”

  1. S3400 says:

    Barry, why don’t you take a contrary position with Japan? If lots of people are buying Japan, why do you stay with the crowd? I think the situation developments are going to give us better opportunities to buy.

    ~~~

    BR: We rec’d selling any Japan position when it hit our stop a week ago THU

  2. S3400 says:

    I misunderstood your post today. I thought you were recommending following Barron’s. Thanks.

  3. swag says:

    The human toll here looks to be much worse than the economic toll, and we can be grateful for that.

  4. BR:
    Does Barron’s mention the Japanese debt problem? I know a lot of it is held by their own citizens, but still. After all, we hear all about the invisible bond vigilantes here.

  5. MayorQuimby says:

    Anyone suggesting people buy something usually already bought it and wants it to go higher.

    Japan’s gdp will take a hit for a couple of quarters if not more. A three day sell-off is not sufficient to account for the severity of the disaster.

    Manufacturing will recover (export-driven). Positive.
    Tourism will eventually but not for a while. Negative.
    Exports MIGHT take a prolonged hit if the nuclear issue is NOT resolved SOON. Major negative.
    Debt levels take another hit. Negative.
    Energy sectors take a hit. Negative.
    Arable land and resources are gone forever. Negative.
    Much of the rebuild will come from external corporations. Negative.
    Most however will come internally. Positive but only brings nominal gdp back up.

    Nothing that happened in Japan is about GROWTH.

    Repairing damage is not economic GROWTH and EXPANSION. It is surviving.

    You want to invest in EXPANSIVE GROWTH not survival or debt/monetization CHURN.

    Same goes for USA btw.

  6. MayorQuimby says:

    Oh and the repatriation of Treasuries will probably happen as well.

  7. MayorQuimby says:

    “update on food situation:….
    Food in Japan contamined with radiation
    Sales of tainted products from near striken nuclear plant banned; spinach and milk affected
    Japan confirmed the presence of radioactive iodine contamination in food products from near a crippled nuclear plant and ordered a halt to their sale, the U.N. nuclear body said on Saturday.

    “Though radioactive iodine has a short half-life of about 8 days and decays naturally within a matter of weeks, there is a short-term risk to human health if radioactive iodine in food is absorbed into the human body,” the International Atomic Energy Agency said in a statement.

    Earlier Japanese officials said radiation levels in spinach and milk from farms the Fukushima Dai-ichi nuclear complex exceeded government safety limits.

    The food was taken from farms as far as 65 miles from the stricken plants, suggesting a wide area of nuclear contamination.

    While the radiation levels exceeded the limits allowed by the government, Chief Cabinet Secretary Yukio Edano insisted the products “pose no immediate health risk.”

    The tainted milk was found 20 miles from the plant, a local official said.

    The spinach was collected from six farms between 60 miles and 75 miles to the south of the reactors.
    Those areas are rich farm country known for melons, rice and peaches, so the contamination could affect food supplies for large parts of Japan.

    More testing was being done on other foods, Edano said in Tokyo, and if tests show further contamination then food shipments from the area would be halted.

    Officials said it was too early to know if the nuclear crisis caused the contamination, but Edano said air sampling done near the dairy showed higher radiation levels.”

    http://www.msnbc.msn.com/id/42165497/ns/health/

  8. the pearl says:

    Anybody else think this doesn’t pass the smell test? I am no raging bear but it seems the general crowd psychology is in overwhelming agreement that Japan is the new bargain of the century. Aren’t there suppose to be zero investors giddy at the bottoms? When the hell did everybody turn into Ben Graham? Don Luskin and Barrons on the same side of a trade?

    Something is wrong here folks, I don’t know what, but too many people eager to buy Japan and the correlated dip in the US Market. I am not smart enough to figure it out, certainly when it comes to the long term effects in Japan, but as far as price action goes, their markets and ETF proxies are far from being in panic mode.

    My gut and charts is telling me to sit this one out in hopes of picking Japan up at much lower prices. If I am wrong, which for the folks in Japan I hope I am, than I am ok with missing the rebound.

  9. jjay says:

    Never let a good crisis go to waste.
    All the rich Japanese can move to California, Nevada, and Arizona and bail out our housing market.
    Plus help out with the property tax revenues.

  10. MayorQuimby says:

    Just looked and the Nikkei is off about 14% from its recent high. That’s a normal market correction withOUT any of this having occurred. I think longs are stuck and are looking for bagholders.

  11. I wouldn’t have bought Japan to hold long before the earthquake and there’s no compelling reason to do so now. Japan is not a long-term growth story unless and until demographic trends reverse. Perhaps this earthquake will prompt Japanese women to start having babies, but I’d wait until fertility statistics sustainably turn around before I’d believe it.

    Barron’s and so much of business journalism is illustrative of the mindset that assumes these little ripples over the past few years in the performance of developed economies are an aberration, that properly applied macroeconomic policies will reinvigorate growth. They’re wrong. The ripples are just prelude to the demographic tsunami that’s about to engulf the developed world. The developed world is growing old and dying, and unless fertility trends reverse, sustainable growth is impossible. In the rich, developed world, aggregate economic growth depends on population growth, yet the richer an economy becomes, the fewer babies its females wish to have. How to tease growth from a declining population base is not a subject much considered in neo-classical economics, which always just assumed populations would grow like trees, to the sky.

  12. beaufou says:

    Is this a case of too much too lose or great buying opportunity?

  13. jeffg says:

    It’s not contrarian – it’s a little late though. You could have had EWJ for under $9.50 a couple of different days – now it’s $10.37 – the next $0.87 puts it over $11.00 – which would certainly be a time to unload it.

  14. franklin411 says:

    @TC
    It’s not too hard to solve the problem of females having too few babies. With the proper breeding techniques and a ratio of say, ten females to each male, I would guess that we could then work our way back to the present Gross National Product within say, twenty years.

  15. globaleyes says:

    When you buy a Japanese stock, you get that culture you see on TV absolutely free!

  16. James P says:

    We will be better off when Curmudgeon and persons who write for the Economist finally realize that there is no longer such a thing as sustainable growth. The term needs a stake through its heart. We are already living beyond the carrying capacity of the planet. I’m not saying that new tech cannot prolong the process but equating population growth with prosperity is quickly becoming an error. Very few of the challenges facing the human race would not be mitigated or fixed by reducing the global population by about 50%. The best way I can think of to accomplish this would be to stop having too many children. Of course the neo-cons are working on their own solution.

    JP

  17. mbelardes says:

    The real contrary call is to buy nuclear energy stocks, which I did and will continue to do so (especially once that are also coal based, like CCJ).

  18. Efficientish says:

    The markets had started to rollover prior to the earthquake in Japan. There may be a brief rally when the nuclear situation stablizes – but ultimately I believe that the prior trend (downward) will resume. I believe that making a long-term investment here is definitely premature.

  19. scintilating says:

    Buy Japan…you must be mad. The no-go zone around Chernobyl is larger than Switzerland and there only one reactor blew up. Before you buy Japan read this .. http://www.nytimes.com/2011/03/20/weekinreview/20chernobyl.html?hp

    It will give you the flavour of what the future holds for Japan.

  20. PDS says:

    Well….what do u expect? Massive QE worked for US …..why should it be different for Japan…..and the move by G7?? It’s co ordinated currency devaluation…..all combines toward seeds of our undoing

  21. louiswi says:

    James P nails it today!!!!

  22. Greshams-law says:

    @PDS. The context is different. Ironically, intervention in the monetary sphere ‘works’ when inflation fears remain elevated, and doesn’t when deflation fears dominate. In the latter case, they end up ‘pushing on a string’. I contend that even if the BOJ & Co. come up with large intervention budgets (by their standards), they’re unlikely to succeed. The assets backing the yen end up increasing by a similar amount to the ‘printed’ yen.

    I explain this in detail here: http://greshams-law.com/2011/03/20/the-economics-of-currency-intervention-will-the-recent-yen-intervention-succeed/

  23. Americans have been “buying” Japan for a long time now, cars, heavy equipment, electronics. Even when the connotation was “cheap Japanese import” we were supporting that economy.
    The Japanese people and country will recover, but it will take a long time after this tragedy.