Barron's had an article making a case for owning Japan.To say Japan has struggled since topping out around 39,000 a couple of decades ago would be an understatement. Throughout this whatever it has been there have been many people that have made the bull case for Japan and this has been wrong for most of the last 15 years.
I should point out that there was a nine month run from summer 2005 to spring 2006 where the Nikkei rallied about 45% which skews the five year comparison versus the S&P 500 in favor of Japan. That nine month rally took the Nikkei to about 17,500. A year and a half later the Nikkei is just above 15,000.
The argument for Japan is always well reasoned and plausible but just never pans out, or perhaps more correctly does not stick.
All those years of zero, or close to it, interest rates and the economy still cannot really get its footing. I don't know the extent to which I could diagnose the problem but there is a problem.
I have never owned Japan nor do I have any plans to own it.
Could now finally be the time to buy in? Of course it could but I don't think so and I know it won't be with my clients money. If Japan really is back do you need to be the first one in?
The simple decision to avoid an area of the market like this can spare some drag and volatility but no Japan requires going a little narrower than what a lot of folks do.
In case you forgot the Maui Invitational basketball tourney starts 90 minutes before the close. I look forward to it every year.
26 comments:
I have a small position in iShares Japan included in my Speculative Portfolio. Hope springs eternal.
Watching paint dry is more interesting at this juncture.
Its different this time...HAHAHA just kidding Roger we all know its the same. Just as the S&L crisis in the late 80's I can't wait to flip the bill for this one. On a related note, I received a solicitation from PIMCO on an IPO of a new fund yielding 10% - wow PIMCO, could it be you have bought up some carappy assets and are now pawning them off onto your retail clients? Good for you...its nice to see scumbag consistancy across the Wall Street board. Keep up the good work Roger - thank you for all the posts!
I see no reason to own Japanese equities for the foreseeable future. Their persistent efforts to choke the life out of the yen means you get no tailwind from the currency as has been the case with most other foreign investments. Conversely, if the yen becomes stronger in spite of their best efforts, then you lose the reason you might want to own Japan in the first place; the ever-increasing exports they sell to the rest of the world helped by a cheap yen. Seems like a no win situation.
the question is what was the average annual return of the Japanese market up till that peak 15 years (or was it more like 20?) ago?
and what happened to all them people that stayed fully invested in that market over those 15 (20?) years because: 1) the market always returned x% on aveage, 2) buy-and-hold is proven to be the best strategy, 3) nobody can time the market, or 4) only God can tell the future.
sami: buy-and-hold is probably still the best strategy as long as one diversifies appropriately across global regions and asset classes.
STEVE C SCOTT,
I am probably the one who posted about Don Coxe. And, I can't say enough about how the guy impresses me. Do you happen to know of a way to tap into an asset mgr that directly follows and reflects Coxe's recommendations? I tried Harris Investments. In a polite way they do not have the same regard for him and even in a 1million dollar account the port will not look anything like what Coxe advisees. Strange that his name is associated with Harris.Any thoughts welcome. jasper
Jasper, I believe he works for BMO, a Canadian investment firm/bank, but he does not appear to be listed as a fund manager. He does have some podcasts available on the site, however.
Are any bulls left out there after today, and in which sectors? I picked up some KO, MOO, and EEM toward the close today, and will probably buy more SHY and
foreign bonds (BEGBX is a good one) if things continue to head south.
Thanks for your work, Roger.
Scoot
I haven't heard any snide remarks from Dave "The Heckler" B about Roger's small double short positions, so I guess that even he has figured this one out. China anyone? LOL
BTW Dave, Barry Scheck called and said to forget about the lawsuit. "Ain't no money in it" I believe was the way he put it.
Roger.
At the risk of sounding corny...
this being Thanksgiving week and all; what do you think about Turkey as a country sector for future investing?
http://www.marketwatch.com/
JackS
there are a lot of things here.
what I know that is good;
fast growth
big population (70 million i think)
young population (early 20s average)
the pipeline stuff
the potential for emu inclusion (it would play a very dominant role, which might be one reason its not happening for now)
currency will do well when carry is in vogue
what i know that is bad;
very volatile (most local investors only allocate 20% or less to local stocks)
occasional political/military dust up (the Kurds)
emu inclusion seems to me like a long shot
I have traded TKF in the past (been a while).
If I ran a bond fund I would put 1-2% in one year Turkish paper, I feel better about the economy than the stock market.
"never pans out, or perhaps more correctly does not stick."
Is this a Teflon cookware joke?
"the potential for emu inclusion"
Emu or Turkey? Pick a large flightless bird and stick with it!
that was pretty quick.
nice piece of business.
If you desire to avoid low expected returns, then ignore Japan? If you desire to skip the chance of China bubble bursting, then skip that too?
Does anyone really understand the future enough to pontificate here?
If the desire is for maximum diversification, then prudent advisors would always recommend Japan and China without blinking.
Roger,
Based on your track record of timing in and out, I'd say your negativity on Japan is a very strong buy signal...
Lets come back to this in 12 months....
I'm willing to wager it will outperform the US market..
In any case, zero exposure is crazy..
yes, anything I do may be right or wrong.
How much are you weighted to Japan and China? Why don't you tell us who you are so we can track what you say?
I am exposed to risk in both China and Japan according to how they are weighted in their respective indexed asset classes(EEM and EFA). These weightings are based on CAPM theory, rather than sloppy speculation.
I am certain that 85% of investors, including you, cannot beat this strategy over the next 10 years.
Don Rickles
So, Roger, when shall we start measuring and publishing results?
I, Don Rickles, do EFA and EEM in equal proportions, and you, Random Roger, do same with (how much?) China and Japan shorted.
Roger,
Just curious now that market is under 13K are you still up for the year?? Be honest, not many people are enjoying the market in the last 6 months. Which sectors did you take the biggest losses in to this point?? Where do you see the Dow ending the year??
can I ask who is asking? Is it skidmark or someone else?
Since the heckler has answered to this name in the past that is what I will call him or her.
Want a strategy that works in a lame and overpriced market? Short the financials. COF and WM shorts are paying of nicely. I will return to regularly scheduled long-based trading when the market works out its issues. Don't ever believe someone when they say "it is priced in". A lot of the price is the price of thinking it is priced in and that can change in a hurry. I was able to short WM for $42 in March, and there were better entries more recently than that. It isn't timing when the decay is in the fundamentals.
Roger:
It's your site. You don't need anyones permission to take out the trash. You also have been open about a willingness to lose money during a down period, so why get caught up in a discussion on portfolio performance with the anonymous trash? I hope you continue to express your opinions, review products, and discuss top down theme based strategies.
Thanks,
Sam
Hecklers disappear when their "strategies" blow up. The few I see here aren't going to last long.
"Just curious now that market is under 13K are you still up for the year?"
And, I'm just curious, why you think the market is the DOW?
ROGER --- Wasn't a heckle. I am even for the year, I admit it. I was watching CNBC and they interviewed 4 guys who are said to be on the top of their games and all are about even or up 5% or so after the fall. I just wanted to see if Roger is with the rest of the world or will say he is up 10% or so as he was up when the market or Dow was $14,200. Just curious. NOTHING wrong with asking. Not sure why it can't get a answer!
thanks Sami.
i talk about performance once a quarter in a video. i explain this every quarter. Putting numbers in print in this forum becomes a compliance issue (so we believe). We further beleive that talking about in a speech (or a video) is not a compliance issue.
You can go to the video posted on Sept 29 and see where I was then. If you have been reading along since then you should be able to piece together that things are going fine.
Even saying that much could result in my being told to delete this comment.
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