Alex Green on Japanese shares:
"Here's a handy way to know when to sell your investments: everyone is talking about them.
"There is an obvious corollary to knowing what to sell. If you want to know what to buy, consider what no one is talking about.
"And that brings me to investing in Japan...
"From a high near 40,000 in 1989, the once-mighty Nikkei 225 - the equivalent of our S&P 500 - fell over 80% and hit a 27-year low early last year. It's still more than 70% below the highs of 21 years ago.
"The main culprit - aside from a real estate bubble that made the one here in the United States look bush-league - was misguided government policies. Japan waited too long to clean up its ailing banking system and spent trillions on public works projects that simply weren't needed.
"However, Japan has a new government that has promised to shrink the country's massive bureaucracy and cut wasteful public spending. It also intends to end more than 20 years of economic stagnation by cutting taxes and focusing on small and mid-sized businesses.
"Japanese stocks have rallied off the lows of 10 months ago. In fact, the Tokyo Exchange is one of the world's best-performing bourses so far in 2010.
"But it's still among the cheapest and most unloved in the world. Virtually no one is enthusiastic about Japanese stocks."
Virtually no one? Hey...that's us!
Another colleague, Merryn Somerset Webb, says it's time to buy Toyota. "You don't get a chance to buy companies like Toyota at book value very often," she says.
Regards,
Bill Bonner
for The Daily Reckoning Australia
P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.
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- End of the Road for Toyota and for Japanese Stocks?
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by SV on 17 February 2010:
Bill,
if/when the Japanese government debt blows it up, how would that affect the Japanese stocks? You mentioned in one of the earlier articles it will not necessarily affect them too negatively. Could you please outline some possible scenarios?
Comment by Charles Norville on 19 February 2010:
Hypothesis: Japan will never recover from its demise until it acquires free hold land unlike the current colonial industrial title it has.....Have a guess where that land would be.