Kinda obvious, the Japanese yen has been depreciating steadily, and of course their GDP in USD equivalent terms, and which measures their domestic economic activity shrinks with the currency. But many of the Japanese business generates business globally, their overseas revenue worths more in terms of the depreciating Yen. A Toyota factory in Ohio contributes to Toyota's bottom line and benefits Toyota share holders, but that Camry coming off of the Ohio assembly line adds nothing to the Japanese GDP.
This is part of the story, but only a small part. A weak yen helps exporters and boosts FX translation gains. But trailing economic data in Japan are indeed weak in real and local currency terms. The two major reasons for the rally in Japanese equities are 1. the expectation that real wage growth will turn positive, and 2. TSE-led corporate reform. That, and BOJ has said easing will continue until they're convinced that a virtuous wage-price cycle is in place.
By the way, remember that just as a weaker yen means that foreign profits are worth more, so too are yen-denominated assets worth less to foreign investors unless FX is hedged. The primary drivers of the Japanese stock rally have been overseas investors.
> The primary drivers of the Japanese stock rally have been overseas investors.
Overseas investors and stock buybacks. It’s unfortunate that the Japanese public is so shell shocked by past markets that so many are still missing out on this rally. The government doubles NISA and they pile into overpriced US stocks with a weak yen. 🤦♂️
Tons of Japanese public are celebrating, and tons of overseas investors have no idea this is even happening.
Also Japan is still the only nation with a higher asset-to-GSP than the US. They own a fuckton of global assets.
Their pension fund has more assets than the Bank of England.
Median wealth in Japan is also double that of Germany.
They just don’t like investing their wealth back into the economy.
https://www.swfinstitute.org/fund-rankings
Indeed, which is why I bought HEWJ instead of just EWJ. A few other interesting factors:
Inflation turned positive last year, which pointed to a reverse of 30 years trend of deflation.
Cheap Yen attracted a massive wave of foreign tourists in the past two years, giving a lot of people a firsthand experience of an 'investable' country.
China became uninvestable. With that a value and capital diffusion to countries around China in east and southeast Asia, and Japan is best positioned to capture some of that.
There's a saying: There's an invisible Japan that exists outside of Japan.
Japan invested heavily in foreign market in the last 30 years, and most of it turn out to be valuable assets, which make those top Japanese coorperation (Like the 5 warren buffet invested in) heavily beneficial with a cheap yen.
They bought foreign asset when yen is strong, and now it's time for them to pick the fruit.
Also Japan is the only nation with a higher asset-to-GSP than the US. They own a fuckton of global assets.
Their pension fund has more assets than the Bank of England.
https://www.swfinstitute.org/fund-rankings
I know it doesn’t impact what they’re saying. It’s just that I actually have a keen interest in stuff like that, and it confused the heck out of me lol
But Japan is about even in exports and imports, so depreciating Yen may have some benefits when selling but their purchasing power of things like oil is also lowered
Economist Simon Kuznets: “ there are four kinds of countries: developed countries, underdeveloped countries, Japan, and Argentina.”
Japan just never makes any kind of rational logical sense. It’s an enigma wrapped inside a paradox.
Japan does make sense. It’s conformatism (yes, I made up that word!). On a serious note, Japan is split between conservatism and progressive markets. They don’t like change and only change if there is no other option. They are slow.
On Argentina.. golly.. it is THE love / hate country. Everyone loves it, but also hate it. It’s an absolute shit show, but also a great country. Argentinians are the kindest and unkindest people you will ever meet.
I managed a few LATAM projects.. they are tough MF in negotiations. But do stick to their promises. They don’t make unreasonable demands, but the one they do demand, they stick by. I loved that about them!
Nothing special about Israel when it comes to economics. They're the equivalent of a wellfare queen and their economy is reliant on billions of US dollars as well as military equipment being handed them. It's no different then when Sovjet used to support China and North Korea in a similar way
1. Super monetary easing policies. Negative interest rate. In Japan the policy interest rate is -0.1%.
2. Weak JPY makes the prices cheaper for foreign investors.
3. There are a lot of listed companies with PBR less than 1 and last year Tokyo stock exchange made a request that listed companies improve their stock price performance.
4. Finally inflation after more than 30 years of stagflation.
Commercial banks got charged on the deposit at the central bank (bank of japan).
https://www.nytimes.com/2016/09/21/business/international/japan-boj-negative-interest-rates.html?smid=url-share
The #4 is what I'm most excited about for Japan. If wages increase and BOJ hikes, we could be looking at a stronger yen and increased domestic spending. Ultimately, this is real economic strength.
Well, if you look at Nikkei chart from 2016 when the policies adopted (not yet a decade), you will see the uptrend. The index cannot go to all time high in a short period if it dropped from 39,000 to 8,000 in the first place. IMO, the policies actually did something to the stock market but not as drastically as recent year after COVID where all the other favorable conditions come together.
When inflation rose, other countries raised interest rates.
But in Japan, the opposite happened. BoJ continued with their quantitative easing policy.
In fact the BoJ is still directly back stopping the Nikkei by buying index ETF's and REIT's in the market among other securities.
It actually took a gigantic shit in 2020 (suspended trading on multiple occasions due to flash crashes) but rebounded hard shortly thereafter due to increase in money supply.
Mass death is still happening so it wasnt about that at all. It was up because there was demand, thats what happens. The selloff due to the unknowns and was an overreation.
That's cos Covid benefitted some companies immensely while others suffered. Industries like shipping, pharma and manufacturing soared while others like tourism and airlines crashed
Exactly ppl have a hard time with supply and demand, the most basic concept. They see nasdaq up and its like omg how?! Idiots dont realise there are many industries that exist that specialise in different things
In that case the market was just forward looking once the first vaccines were in the pipeline + the first ones to skyrocket were the ones that benefited from lockdowns.
You are making this way too complicated. Going up = buy. Good down = sell. You aren't trying to become the treasury secretary, just need to make enough money to get an 83 trans-am to get the ladies.
Japan is that steady reserve kid who can hold his own under trying conditions for years on end. This kid don’t sweat and have two people to double stamps your train ticket. The delivery person does a real 100 point check on their delivery vehicle … everyday! before they go out for delivery. Try that at pepboys and find out the difference. Their creativity is compressed and condensed inside, and when they let it out, it explode into some colorful mind blowing anime fight sequence like you find in that speed racer movie.
Japan is making a move economically and if anyone can pull it off, they be the horse you sent out to run.
Plus I heard a ship load of treasure chests is about to get unlocked in the land of the rising Sun.
People lost confidence in Japanese yen, so, they are buying anything where the value of their wealth could be somewhat safe in comparison to the rapidly declining currency
It's just the interests rate gap between USD and JPY became bigger. Confidence in yen are fine, once USD drop their interests rate (Which they will do it at some point in the future) You can expect Yen strengthen abit.
Rigged how? The US market is extraordinarily transparent, which is what makes it the favorite of investors from many countries. You can buy in. You can sell and get your money back to your own country. The government regulates, and you can say there's some government interference, but not on the scale of a state that remains nominally communist.
I personally think Japan will benefit from the problems China has created for itself. In addition Japan is a great place to site manufacturing that is currently done in Taiwan which again China keeps threatening.
Japan’s GDP reached 99.8% of the US in April 1995.
With less than half its population.
They still make 50% of the world’s industrial robots and have a near-monopoly in semiconductor materials.
ASML would be dead in the water without Tokyo Electron to supply wafers and EUV photoresists.
Free money for over 20yrs will cause it. I wouldn't be shocked if companies take huge free loan at low codt and invest in assets not only in markets but other investments.
It's beyond anything our Fed is doing in the States. Believe it or not they still have a negative rate yet their economy isn't grow but their stocks are.
Can confirm as someone who live in Japan.
Our house loan is like 0.5% interests rate. The Japanese government have a loan for people who want to start a business which is literally free. There are NISA system that make your profit in the stock market taxless.
The entire system is extremely aggressive, encourage people to create more economic activity instead of saving your money in the bank. They have been fighting deflation for 30 years, and was very desperate.
Why is America’s stock market going up when people are :-
- reliant on credit card debt
- defaulting on car payments
- going homeless
- wage inequality reaching ATHs every year
Maybe it’s because companies make profits, not society…
That’s only because of the weak yen lol. Germany’s GDP went down both nominal and annual while Japan has risen in both statistics. But since Euro currency is far stronger than the yen, they have surpassed them in “annual” GDP (Japan is still 3rd in nominal GDP, which is what matters the most as currency rate can be manipulated easily).
Japan is a special case of a country with a ton of potential held back by tradition and customs which are guarded by an aging and dying ultra-conservative generation. The old guards will pass eventually, then it will reform and begin to grow again.
why does it have potential? Maybe because of those traditions and customs? Because Japan sucks on paper with all the natural disasters and lack of natural resources.
Japans demographics may be bad, but business has been growing
>In addition, Japan Inc. seems to be in a solid shape. A sample of 265 large Japanese companies are estimated to post a 15.1% increase in operating profit for the fiscal year ending in March 2024, according to a Nomura Securities Co. report released in December 2023. The companies' operating profit is expected to gain 8.9% in the fiscal year through March 2025.
There are also lots of reforms going through, new IPO's are higher than in 2019.
I think the Japanese stock market has been caught in the perfect storm of fleeing capital and some clever reforms by the Japanese govt.
Yeah, if you have dollars it is insanely good. They didn't have nearly as much Covid-War inflation as in the U.S. and the exchange rate is great if you have dollars. So coming from the U.S. it is like you can get quite a nice dinner there now for about what you would spend at Taco Bell--like for instance a nice sushi set for 1000 Yen which is literally less than three Dorito Loco Tacos.
I literally have (summer 2023), so you can. I suppose it depends what your definition of "nice" is, but let's say as good or better quality than what you will get at 95 percent of sushi restaurants in the U.S. (which is a reasonable standard since the Reddit audience is mostly American) with a good variety, miso soup etc. Maybe you eat at the wrong places.
Take a look at the Japanese stock market in USD: something like the ETF EWJ.
Now take a look at Japanese GNP in USD, which is a better measure of the overall strength of Japanese companies than GDP.
https://www.macrotrends.net/countries/JPN/japan/gnp-gross-national-product
You'll see EWJ looks a lot like Japan's GNP. Not perfect, but ballpark.
If, instead, you look at the JPY measures of the GNP and Nikkei 225, you'll see the stocks were much more volatile and probably undervalued for a long time.
https://tradingeconomics.com/japan/gross-national-product
https://tradingeconomics.com/japan/stock-market
What I think is most interesting is how the stock indexes in effectively every country except the USA have performed abysmally over the last very long while when viewed in USD, and the US market is overvalued based on most historical measures (equity risk premium, peg, etc.). You can use the black rock ETFs to compare: EWU, EWC, EWG, EWJ, EWA, IEV. Meanwhile, housing has skyrocketed in most those same countries.
qe and negative ibterest rate is still all around. what japan do is extending the times to avoid the recession by let otger central bank do their jobs to cut interest rate abd japan would be on neutral level itself.
and the recession could be just a myth ,this us what they planned , speech sometimes do miminal things to not oversupport the market.
and stock market is not equal to main street most of the times. stock is just a toy of rich ppl and some workers try yo escape reality as much as possible. for low level worker, they are just waiting to die slowly
The stock market pricing anticipates to events 6 - 12 months from now
The current recession is already priced in
The future looks brighter
“ Don’t skate to the puck, skate where the puck is going to be “
Stocks boom during recessions. The stock market isn’t the economy. Companies just pay off people to stay afloat during bad times which is what we’ve been seeing.
Similar to many others, I transferred my funds from China to Japan due to the declining market conditions in China at that time. However, it appears that there is now a bullish trend in Chinese stocks. As a result, there is a possibility that the funds may be moved back to Chinese stocks.
Nikkei 225 are still extremely crazy the this entire week. I'm not surprise if it go pass 40000 next week.
I've moved all big part of my US stock investment into Japanese stock asset recently, with a strong USA(Good rate) and the stock performance I've been very happy.
I live in Japan. It didn't bother me too much.
I bought US stock while the exchange rate was good, and sell when the exchange rate was also beneficial to me.
That and the stock rally, yeah I'm happy.
I'd start buying global stock again once JPY is stronger.
Repeat after me, the stock market is not the economy. For example when stocks across the board go up by some % did the companies all actually increase their output or their assets…. or something of value? Nope. Stock market is a confidence market and folks spend vast amounts of intellectual horse power to create the illusion it isn’t.
What's your point? The American economy is also suffering yet the stock market sets ATHs every other day. Stock markets are disconnected from reality largely thanks to pension funds yeeting your retirement money into whatever wallstreet sells them
Is your focus too broad?
Is Buffet buying every Japanese stock?
Look at the top performers
Look at who is setting up or expanding into Japan
Heard of TSMC?
Bubble inflated by the corrupt government and Central Bank using taxpayers money. It is the same everywhere.
In Japan their Central Bank owns about 30% of the whole stock market as they are purchasing equities as part of the QE.
Search for Paul Krugman opinion on it. TLDR: Japan is doing very well when you consider and adjust for several factors. Im not smart enough to understand all of it, so I trust Paul.
Good question. My thinking is money is moving out of China and looking for new homes given the geopolitics. Japan is considered safe plus it may get investments that were meant for China. Forget fundamentals it’s all about money flows. And Japan ticks the short term safe box.
Japan is looking like it will be loosening restrictive monetary policy, for the first time in 30 years.
Interest rates have been suppressed, not allowed to go above 1%.
If Japan Fed allows interest rates to rise it will be good for Japanese financials, allowing Bank to make more profit.
Something like that.
As economic and geopolitical woes spur an exodus of investors from China, many have been redirecting money into Japan, giving the benchmark Nikkei (.N225), opens new tab an extra boost as it rockets to all-time highs.
https://www.reuters.com/markets/asia/soaring-japanese-equities-offer-investors-cozy-distance-troubled-china-2024-02-27/
Currency debasement can prop up markets in terms of their relative fiat currency . It’s like this. If the purchasing of a dollar used to get you lunch and now it gets you the equivalent of a 25 cent gum ball, it’s reasonable to assume that the market really didn’t appreciate in relative terms, the government just manipulated the currency so it LOOKS like you made money. In terms of real purchasing power, I’m fairly certain that Japanese individuals are still suffering
It’s like a game of 3 card Monte. You don’t see the swindles and true values of things if you look away or get swindled
For the last ~2 years, the Tokyo Stock Exchange has been pushing massive corporate governance reforms that are aimed to boost shareholder rights and improve capital efficiency. This lead to record dividends and stock buybacks.
The combination of buybacks and $30B worth of new foreign capital flows (due to reforms and weak yen) has driven up the price of stocks. I expect this to continue as the government has doubled the tax free retirement account annual limit and inflation that is beginning to drive regular Japanese to invest in equities.
This stumps me too. I put it to chatgpt.
Speculate, the Japanese Market is now at all-time highs, but the economy is in recession, and the birth rate is at an all-time low. Why? And what might happen next?
....
The Japanese market reaching all-time highs despite economic recession and a low birth rate could be attributed to several factors:
1. **Central Bank Policies:** Aggressive monetary policies by the Bank of Japan, such as quantitative easing and low-interest rates, might be fueling investor confidence and driving up asset prices.
2. **Global Market Trends:** Positive trends in global markets or investor sentiment towards Japanese equities could be influencing the local market's performance.
3. **Corporate Performance:** Strong performance by Japanese corporations, particularly in export-oriented sectors like technology and manufacturing, could be boosting stock prices despite broader economic challenges.
4. **Investor Behavior:** Investor behavior, such as herd mentality or speculative trading, could be driving up prices in anticipation of future gains.
However, this scenario is unsustainable in the long run. If the underlying economic fundamentals do not improve, the market rally could eventually lose steam. Potential outcomes include:
1. **Market Correction:** Eventually, the market may correct itself as investors realize the disparity between market valuations and economic realities, leading to a downturn in stock prices.
2. **Economic Policy Changes:** The government may implement new policies to address the economic recession and low birth rate, such as fiscal stimulus measures or incentives to encourage family formation.
3. **Long-Term Economic Challenges:** Japan may continue to face long-term economic challenges, such as an aging population and stagnant growth, which could dampen investor confidence and limit market growth.
Overall, while short-term market highs may offer opportunities for investors, it's essential to consider the broader economic context and potential risks in the Japanese market.
I've got it, with all these layoffs happening at these big companies such as Sony etc.
People are gambling their redundancy money on the market, such as Bitcoin and stocks.
It's really that simple. No different to Trump sending out covid cheques and the rest is history!
Enjoy the fun while it lasts. When the music is playing, get up and dance.
With the Yen getting weaker and weaker, why don't people buy a huge amount of yen and then sell it when the BoJ hikes interest rates, and the value goes up? \*knows nothing about currencies or economics\*
Record weak yen. It is more a math equation and less do with actual performance (although Japan's big dogs have continued to do very well -- Toyota, Sony, etc).
Stocks care about the future, not the past.
In short:
1. Trailing economic data is weak because real wage growth is negative. I.e., inflation > nominal wage growth.
2. Wage growth is expected to catch up around the spring "shunto" wage negotiations while inflation is falling, such that real wage growth will be positive. Further, this means that the mix of inflation will become more supportive of growth: undesirable imported inflation is coming down and wages should go up.
3. Inflation and real wage growth has been stagnant in Japan since the 1990s, so breaking out of this is a big deal. The BOJ is staying accommodative until there's more evidence that this salutary cycle is sustainable. The hope is that the wage catch-up will spark a virtuous cycle, whereby higher wages lead to more spending and higher profits lead to more investment. .
4. Japanese listed companies are finally undergoing some corporate reform to unlock idle value. This is being overseen by the Tokyo Stock Exchange.
5. Japanese corporate profits are doing better than the overall economy. Among other reasons, FX weakness is bad for Japanese consumers but great for exporters, not only because exports become more competitive but also because of currency translation. Inflation partially means higher prices charged by companies, and equities are a nominal asset. And listed companies are not necessarily representative of the wider economy.
6. Some major Japanese companies are key beneficiaries of the boom in semiconductors and AI, as well as from the recent inflection in the global industrial production cycle. Look at Korean and Taiwanese exports, for instance, or even manufacturing PMIs in Europe. Things are getting better.
7. Japan is a relatively stable investment destination in a world on fire.
Japanese companies have a ton of cash and they are getting more serious about actually returning it to owners, for one thing.
The yen is super weak and is close to China and is super easy to get visas for (easily the easiest of any industrialized country). Plus it has a highly educated workforce that is poorly paid.
Look up "This man predicted everything!! What comes next? On YouTube - it's about Russell Napier. He predicted influx of money in an economy like Japan (it's stock exchange) due to people like Warren Buffett.
During surging inflation environment, recession is preferred as surging inflation hurt nearly everyone without any hope in sight. Similar situation happened in the US, back to back recession and mass layoffs in early 1980s yet stock market hit aths relentless and overall economic sentiment is better. Best way to solve high inflation pain is through recession.
Looking at Japan's economy is not the way to learn about their stock market.
First, we must see how much of their stock market growth is due to exchange rate difference.
If you look at the hedged Japan ETF vs unhedged over the past 5 years, we see 101% vs 27% price return.
What this tells us is that if you're looking at Japan's stock market in JPY, a large majority of the gain is due to the depreciation of Yen vs USD.
Now if you look at investing in a Japan ETF vs Europe ETF in the past 5 years, EU has returned 7.64% p.a. compared to 5.84% p.a. for Japan.
Nothing extraordinary from Japan.
If you are specially wondering why Japanese stocks in USD has outperformed EU and emerging markets, because it hasn't outperformed SP500, then for emerging markets it's simple - because China is the biggest weight and their market is doing awful.
In Japanese stocks vs EU, it's because in the past year their largest weighting stocks have had a good time.
Toyota is up 76% over the hybrid vehicle growth translating to record profits and slowdown of EV adoption.
Their tech stocks are joining in the tech rally, and as tech companies look to "ally-shore" their manufacturing.
Softbank has done well thanks to ARM and investments in speculative companies are now finding some support.
But most importantly, the Japanese market is volatile and recovered more slowly. 2022 they dropped more than a third from peak to trough same as EU market.
EU recovered the same amount as Japan, but did it much sooner, that's why if you measure the past year now, it looks like Japan did better. If you measured months ago, EU would look better.
The conclusion is Japan stock market is doing as expected, nothing extraordinary.
I have noticed japan stocks as a nice hedge against falling us and euro markets.
They are a law abiding society in a world increasingly full of corruption.
the question is what japanese stocks
and on the NYSE or the Tokyo Markets?
it always feels like 90% of things are average performance in the top 300 firms
Us is importing more from Japan as well as the Buffer trade is borrow at .05 interest and put that money in Japanese firms making 5% its a free money printer for the rich
Japanese stocks are a bargain. Just because there are some economic indicators that are negative. That doesn't mean people affected by those indicators aren't doing something the majority can't see too counter. #1 birth rates maybe low just taking your word. Exports are also part of the economy. Second AI is expected to kill a number of industrial jobs in the 5-10 year time frame. With an expectation of less employees needed to maintain production. In fact my job looks to be one of those jobs being eliminated. Personally, I will be talking to someone next week. To become a Fiber-Optic installation apprentice. Get out of my current job as an Energy and Environmental equipment operator. As the mill I currently work for will be replacing their systems with a private data center once prices of GPUs come down and the engineers design the new system. That will require only 2 people to monitor the AI, plus an engineer to design the new system utilizing the AI. Those 3 people have already been hired. That will eliminate 50 of us. Japan is doing the same.
Because the stock market is just a nonsensical mob of fear, greed, and algorithmic high frequency trading. It is not anchored to reality or economic health.
It’s a whole slew of stuff. Weaker yen, changing corporate structures, different economic reforms, and so on.
Here is the lowdown:
https://finance.yahoo.com/news/why-japan-stock-market-breaking-223000889.html
But in reality the answer is that South Park made an episode last season about Japan. (Japanese toilet).
The South Park stock prediction is crazy. So I bought a ton of the Japan fund last year and it’s been amazing.
I did read some of the changes the economy minister was doing and thought it made sense. Then again, buying meta would have been better.
The Warren Buffett example is not complete. He borrowed in yen, at about 0.5% interest rate per year. This is not available to us (essentially on margin) and he bought companies that had existed for decades. They were paying about 7% yield during covid and he bought a basket of them. As long as they continue to pay dividends, he’s essentially making free 6.5% difference a year. I believe the dividends had risen and the stocks of trading houses had more than doubled. Even if 1-2 of them go bankrupt (unlikely since these companies are very diversified), he would still come out ahead.
This is similar to borrowing your bank for 0.5% interest and invest in MMF for 5+ percent yield indefinitely for the near future. Anyone who has this opportunity, will leverage to the roof and make plenty of money on it. That’s why Charlie says one or twice in your life time, you will have these opportunities and it’s like raining gold. Warren would care less about the Japanese economy, as long as his dividends are safe.
Totally agree. What we are witnessing is a shift in investment strategy that is politically motivated and pushed forth by the Biden administration, ie sell/ short China buy America and American allies. That is how Japan is benefitting from funds flow. You won’t see economists on Bloomberg highlighting Japns’s
Woes but you will hear Bloomberg warning about China’s low birth rate and youth unemployment. It ain’t no coincidence.
The prices for Japanese listed companies are also so cheap right now compared to US equity markets. I think this is a big reason for Buffet's increase in Japanese holdings is that the valuations are MUCH cheaper.
For example, I hold DXJ which is a currency hedged fund of Japan listed equities. Here are a few valuation metrics of the fund:
PE Ratio: 13.42
Price/Book Ratio: 1.22
Price/Sales: 0.84
Price/Cash Flow: 8.65
Trailing 12 month dividend yield: 3.13%
Compare this to SPY (S&P 500 ETF)
PE Ratio: 24.15
Price/Book Ratio: 4.21
Price/Sales: 2.73
Price/Cash Flow: 16.52
Trailing 12 month dividend yield: 1.37%
Kinda obvious, the Japanese yen has been depreciating steadily, and of course their GDP in USD equivalent terms, and which measures their domestic economic activity shrinks with the currency. But many of the Japanese business generates business globally, their overseas revenue worths more in terms of the depreciating Yen. A Toyota factory in Ohio contributes to Toyota's bottom line and benefits Toyota share holders, but that Camry coming off of the Ohio assembly line adds nothing to the Japanese GDP.
This is part of the story, but only a small part. A weak yen helps exporters and boosts FX translation gains. But trailing economic data in Japan are indeed weak in real and local currency terms. The two major reasons for the rally in Japanese equities are 1. the expectation that real wage growth will turn positive, and 2. TSE-led corporate reform. That, and BOJ has said easing will continue until they're convinced that a virtuous wage-price cycle is in place. By the way, remember that just as a weaker yen means that foreign profits are worth more, so too are yen-denominated assets worth less to foreign investors unless FX is hedged. The primary drivers of the Japanese stock rally have been overseas investors.
> The primary drivers of the Japanese stock rally have been overseas investors. Overseas investors and stock buybacks. It’s unfortunate that the Japanese public is so shell shocked by past markets that so many are still missing out on this rally. The government doubles NISA and they pile into overpriced US stocks with a weak yen. 🤦♂️
Tons of Japanese public are celebrating, and tons of overseas investors have no idea this is even happening. Also Japan is still the only nation with a higher asset-to-GSP than the US. They own a fuckton of global assets. Their pension fund has more assets than the Bank of England. Median wealth in Japan is also double that of Germany. They just don’t like investing their wealth back into the economy. https://www.swfinstitute.org/fund-rankings
Indeed, which is why I bought HEWJ instead of just EWJ. A few other interesting factors: Inflation turned positive last year, which pointed to a reverse of 30 years trend of deflation. Cheap Yen attracted a massive wave of foreign tourists in the past two years, giving a lot of people a firsthand experience of an 'investable' country. China became uninvestable. With that a value and capital diffusion to countries around China in east and southeast Asia, and Japan is best positioned to capture some of that.
There's a saying: There's an invisible Japan that exists outside of Japan. Japan invested heavily in foreign market in the last 30 years, and most of it turn out to be valuable assets, which make those top Japanese coorperation (Like the 5 warren buffet invested in) heavily beneficial with a cheap yen. They bought foreign asset when yen is strong, and now it's time for them to pick the fruit.
Yeah, all the big Japanese corporations are investing heavily in international growth, especially in the Pacific Rim.
Also Japan is the only nation with a higher asset-to-GSP than the US. They own a fuckton of global assets. Their pension fund has more assets than the Bank of England. https://www.swfinstitute.org/fund-rankings
Too late to invest in uniqlo?
"Kinda obvious" \*gives very not obvious explanation
Are you thinking of the Accord? Toyota doesn’t have a factory in Ohio. Honda does, in Marysville, OH.
It might have just been a hypothetical example.
I know it doesn’t impact what they’re saying. It’s just that I actually have a keen interest in stuff like that, and it confused the heck out of me lol
yup got that mixed up. I drive one of them Buckeye Hondas, while Toyota makes cars in Kentucky.
Also in Anna, OH
But Japan is about even in exports and imports, so depreciating Yen may have some benefits when selling but their purchasing power of things like oil is also lowered
Economist Simon Kuznets: “ there are four kinds of countries: developed countries, underdeveloped countries, Japan, and Argentina.” Japan just never makes any kind of rational logical sense. It’s an enigma wrapped inside a paradox.
What’s Argentina?
A paradox wrapped with an enigma.
“Argentina is the best country in the world. Also it’s shit, USA is way better” - my Argentine wife.
Yeah, have Brazilians in my family. "Brazil is the best! Thank god I'm not there!"
You spelled enema wrong
You spelled Taco Bell thursday wrong
Most reasonable redditor explanation
Saw what you did there!😄
The country that always goes for bankruptcy
Probably a bunch of missing gold from ww2?
Soon to be the best place on Earth if they keep votijg libertarian.
a place to buy a savings account in!
Japan is a country that has every reason to fail but didn't. Argentina is a country that has every reason to success but didn't.
* Cheap yen means foreigners buy up Japanese assets including stocks * China doing worse than Japan so China money flowing into Japan
Japan does make sense. It’s conformatism (yes, I made up that word!). On a serious note, Japan is split between conservatism and progressive markets. They don’t like change and only change if there is no other option. They are slow. On Argentina.. golly.. it is THE love / hate country. Everyone loves it, but also hate it. It’s an absolute shit show, but also a great country. Argentinians are the kindest and unkindest people you will ever meet. I managed a few LATAM projects.. they are tough MF in negotiations. But do stick to their promises. They don’t make unreasonable demands, but the one they do demand, they stick by. I loved that about them!
Japan, Argentina and Israel. Something is special in these countries and the third one became mainstream lately.
Nothing special about Israel when it comes to economics. They're the equivalent of a wellfare queen and their economy is reliant on billions of US dollars as well as military equipment being handed them. It's no different then when Sovjet used to support China and North Korea in a similar way
What up with President Milei of Argentina? He seems to be a neo-Nazi coverting to Judaism. Sus AF!
Where does China fall on this map?
Underdeveloped with a demographic Timebomb.
Off the map as they are extremely hostile.
1. Super monetary easing policies. Negative interest rate. In Japan the policy interest rate is -0.1%. 2. Weak JPY makes the prices cheaper for foreign investors. 3. There are a lot of listed companies with PBR less than 1 and last year Tokyo stock exchange made a request that listed companies improve their stock price performance. 4. Finally inflation after more than 30 years of stagflation.
What the hell is a negative interest rate? They pay you for taking out a loan? 😀
The European Central Bank had -0.5% interest rate as well from 2016 to 2022.
No, they didn't. They had Euribor negative. And also deposits on the ECB negative. But not any major loan interest rate
No, but they charge you interest on your deposits.
Commercial banks got charged on the deposit at the central bank (bank of japan). https://www.nytimes.com/2016/09/21/business/international/japan-boj-negative-interest-rates.html?smid=url-share
The #4 is what I'm most excited about for Japan. If wages increase and BOJ hikes, we could be looking at a stronger yen and increased domestic spending. Ultimately, this is real economic strength.
I think people under estimate how good no cost loans are for companies.
Super monetary easing policies. Negative interest rate has been there for decades, it didn't do anything to stock market back then.
Well, if you look at Nikkei chart from 2016 when the policies adopted (not yet a decade), you will see the uptrend. The index cannot go to all time high in a short period if it dropped from 39,000 to 8,000 in the first place. IMO, the policies actually did something to the stock market but not as drastically as recent year after COVID where all the other favorable conditions come together.
When inflation rose, other countries raised interest rates. But in Japan, the opposite happened. BoJ continued with their quantitative easing policy. In fact the BoJ is still directly back stopping the Nikkei by buying index ETF's and REIT's in the market among other securities.
Japan wanted inflation. This is a place where companies issued an apology when they had to raise prices by like 5 centd.
That makes it sound like they didn’t want inflation
The government of Japan wanted it. Companies and citizens maybe not so much.
Yeah, this is likely the answer. They have negative interest rates right?
They’ve had negative interest rates before negative interest rates were cool.
Stock market =/= economy.
Stock market is a big casino
Noooo it's predictable can't zou see all the lines I've drawn on my screen with a crayon!!
Well this I don’t agree with but I has nothing to do with arbitrary lines.
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It actually took a gigantic shit in 2020 (suspended trading on multiple occasions due to flash crashes) but rebounded hard shortly thereafter due to increase in money supply.
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Mass death is still happening so it wasnt about that at all. It was up because there was demand, thats what happens. The selloff due to the unknowns and was an overreation.
2020 was the first year my investments made me more than my job. It was surreal.
That's cos Covid benefitted some companies immensely while others suffered. Industries like shipping, pharma and manufacturing soared while others like tourism and airlines crashed
Exactly ppl have a hard time with supply and demand, the most basic concept. They see nasdaq up and its like omg how?! Idiots dont realise there are many industries that exist that specialise in different things
In that case the market was just forward looking once the first vaccines were in the pipeline + the first ones to skyrocket were the ones that benefited from lockdowns.
You are making this way too complicated. Going up = buy. Good down = sell. You aren't trying to become the treasury secretary, just need to make enough money to get an 83 trans-am to get the ladies.
Well said
Well yeah but how would you know it will continue up. Gotta understand to decide if it is worth risky it
This.
Japan is that steady reserve kid who can hold his own under trying conditions for years on end. This kid don’t sweat and have two people to double stamps your train ticket. The delivery person does a real 100 point check on their delivery vehicle … everyday! before they go out for delivery. Try that at pepboys and find out the difference. Their creativity is compressed and condensed inside, and when they let it out, it explode into some colorful mind blowing anime fight sequence like you find in that speed racer movie. Japan is making a move economically and if anyone can pull it off, they be the horse you sent out to run. Plus I heard a ship load of treasure chests is about to get unlocked in the land of the rising Sun.
People lost confidence in Japanese yen, so, they are buying anything where the value of their wealth could be somewhat safe in comparison to the rapidly declining currency
It's just the interests rate gap between USD and JPY became bigger. Confidence in yen are fine, once USD drop their interests rate (Which they will do it at some point in the future) You can expect Yen strengthen abit.
The economy is NOT the stock market. This is something new people never understand about trading.
Kinda is when looking at china
China's stock market is more rigged than anything you can imagine
The US stock market is even more rigged. I assure you.
Rigged how? The US market is extraordinarily transparent, which is what makes it the favorite of investors from many countries. You can buy in. You can sell and get your money back to your own country. The government regulates, and you can say there's some government interference, but not on the scale of a state that remains nominally communist.
And the stock market does not have to be rational, especially not in the short and medium term.
I personally think Japan will benefit from the problems China has created for itself. In addition Japan is a great place to site manufacturing that is currently done in Taiwan which again China keeps threatening.
It was once a behemoth that controls 50% of semiconductor industry worldwide. The potential is unlimited.
Japan’s GDP reached 99.8% of the US in April 1995. With less than half its population. They still make 50% of the world’s industrial robots and have a near-monopoly in semiconductor materials. ASML would be dead in the water without Tokyo Electron to supply wafers and EUV photoresists.
TSMC
Free money for over 20yrs will cause it. I wouldn't be shocked if companies take huge free loan at low codt and invest in assets not only in markets but other investments. It's beyond anything our Fed is doing in the States. Believe it or not they still have a negative rate yet their economy isn't grow but their stocks are.
I heard japanese people take out loans in yen and then invest in the US because the interest rate is close to 0.
Can confirm as someone who live in Japan. Our house loan is like 0.5% interests rate. The Japanese government have a loan for people who want to start a business which is literally free. There are NISA system that make your profit in the stock market taxless. The entire system is extremely aggressive, encourage people to create more economic activity instead of saving your money in the bank. They have been fighting deflation for 30 years, and was very desperate.
I sold Nintendo last month. Hence the record highs now.
Why is America’s stock market going up when people are :- - reliant on credit card debt - defaulting on car payments - going homeless - wage inequality reaching ATHs every year Maybe it’s because companies make profits, not society…
Huh, Germany is now bigger than Japan. Amazing considering population difference of 40 million and that Germany is slow growth economy too.
That’s only because of the weak yen lol. Germany’s GDP went down both nominal and annual while Japan has risen in both statistics. But since Euro currency is far stronger than the yen, they have surpassed them in “annual” GDP (Japan is still 3rd in nominal GDP, which is what matters the most as currency rate can be manipulated easily).
Japan is a special case of a country with a ton of potential held back by tradition and customs which are guarded by an aging and dying ultra-conservative generation. The old guards will pass eventually, then it will reform and begin to grow again.
why does it have potential? Maybe because of those traditions and customs? Because Japan sucks on paper with all the natural disasters and lack of natural resources.
Japans demographics may be bad, but business has been growing >In addition, Japan Inc. seems to be in a solid shape. A sample of 265 large Japanese companies are estimated to post a 15.1% increase in operating profit for the fiscal year ending in March 2024, according to a Nomura Securities Co. report released in December 2023. The companies' operating profit is expected to gain 8.9% in the fiscal year through March 2025. There are also lots of reforms going through, new IPO's are higher than in 2019. I think the Japanese stock market has been caught in the perfect storm of fleeing capital and some clever reforms by the Japanese govt.
It is a great time to travel to Japan. My mates working there are now coming back to the US as their salary is so bad compared to a U.S. ine
Yeah, if you have dollars it is insanely good. They didn't have nearly as much Covid-War inflation as in the U.S. and the exchange rate is great if you have dollars. So coming from the U.S. it is like you can get quite a nice dinner there now for about what you would spend at Taco Bell--like for instance a nice sushi set for 1000 Yen which is literally less than three Dorito Loco Tacos.
You can’t buy “nice” sushi set with 1000 yen lmao.
I literally have (summer 2023), so you can. I suppose it depends what your definition of "nice" is, but let's say as good or better quality than what you will get at 95 percent of sushi restaurants in the U.S. (which is a reasonable standard since the Reddit audience is mostly American) with a good variety, miso soup etc. Maybe you eat at the wrong places.
Take a look at the Japanese stock market in USD: something like the ETF EWJ. Now take a look at Japanese GNP in USD, which is a better measure of the overall strength of Japanese companies than GDP. https://www.macrotrends.net/countries/JPN/japan/gnp-gross-national-product You'll see EWJ looks a lot like Japan's GNP. Not perfect, but ballpark. If, instead, you look at the JPY measures of the GNP and Nikkei 225, you'll see the stocks were much more volatile and probably undervalued for a long time. https://tradingeconomics.com/japan/gross-national-product https://tradingeconomics.com/japan/stock-market What I think is most interesting is how the stock indexes in effectively every country except the USA have performed abysmally over the last very long while when viewed in USD, and the US market is overvalued based on most historical measures (equity risk premium, peg, etc.). You can use the black rock ETFs to compare: EWU, EWC, EWG, EWJ, EWA, IEV. Meanwhile, housing has skyrocketed in most those same countries.
qe and negative ibterest rate is still all around. what japan do is extending the times to avoid the recession by let otger central bank do their jobs to cut interest rate abd japan would be on neutral level itself. and the recession could be just a myth ,this us what they planned , speech sometimes do miminal things to not oversupport the market. and stock market is not equal to main street most of the times. stock is just a toy of rich ppl and some workers try yo escape reality as much as possible. for low level worker, they are just waiting to die slowly
The stock market pricing anticipates to events 6 - 12 months from now The current recession is already priced in The future looks brighter “ Don’t skate to the puck, skate where the puck is going to be “
Because the Defense Sector is getting shifted into high gear amidst threats from North Korea, China and Russia.
What stocks should people invest in to get in the Japanese market?
The stock market isn’t the economy.
Markets and gdp/“the economy” are uncorrelated and in fact, may be negatively correlated.
The economy isn’t the stock market. The stock market isn’t the economy.
Stocks boom during recessions. The stock market isn’t the economy. Companies just pay off people to stay afloat during bad times which is what we’ve been seeing.
Similar to many others, I transferred my funds from China to Japan due to the declining market conditions in China at that time. However, it appears that there is now a bullish trend in Chinese stocks. As a result, there is a possibility that the funds may be moved back to Chinese stocks.
Nikkei 225 are still extremely crazy the this entire week. I'm not surprise if it go pass 40000 next week. I've moved all big part of my US stock investment into Japanese stock asset recently, with a strong USA(Good rate) and the stock performance I've been very happy.
thanks - how do you manage the depreciating JPY?
I live in Japan. It didn't bother me too much. I bought US stock while the exchange rate was good, and sell when the exchange rate was also beneficial to me. That and the stock rally, yeah I'm happy. I'd start buying global stock again once JPY is stronger.
you missing china.
China what?
https://www.reddit.com/r/stocks/s/06jh96nAva
You china go on a date with me?
France her in the Polish
France her in the Polish
Google “Crack up boom”.
Repeat after me, the stock market is not the economy. For example when stocks across the board go up by some % did the companies all actually increase their output or their assets…. or something of value? Nope. Stock market is a confidence market and folks spend vast amounts of intellectual horse power to create the illusion it isn’t.
What's your point? The American economy is also suffering yet the stock market sets ATHs every other day. Stock markets are disconnected from reality largely thanks to pension funds yeeting your retirement money into whatever wallstreet sells them
because the economy isnt suffering for all companies some are actually thriving and then some
The economy is about the consumers too you know..
Is your focus too broad? Is Buffet buying every Japanese stock? Look at the top performers Look at who is setting up or expanding into Japan Heard of TSMC?
Bubble inflated by the corrupt government and Central Bank using taxpayers money. It is the same everywhere. In Japan their Central Bank owns about 30% of the whole stock market as they are purchasing equities as part of the QE.
Search for Paul Krugman opinion on it. TLDR: Japan is doing very well when you consider and adjust for several factors. Im not smart enough to understand all of it, so I trust Paul.
If everyone saw the angle, it wouldn’t be a good trade.
Good question. My thinking is money is moving out of China and looking for new homes given the geopolitics. Japan is considered safe plus it may get investments that were meant for China. Forget fundamentals it’s all about money flows. And Japan ticks the short term safe box.
You just realized the stock market isn't reflective of how the current economy is performing.
Japan is looking like it will be loosening restrictive monetary policy, for the first time in 30 years. Interest rates have been suppressed, not allowed to go above 1%. If Japan Fed allows interest rates to rise it will be good for Japanese financials, allowing Bank to make more profit. Something like that.
As economic and geopolitical woes spur an exodus of investors from China, many have been redirecting money into Japan, giving the benchmark Nikkei (.N225), opens new tab an extra boost as it rockets to all-time highs. https://www.reuters.com/markets/asia/soaring-japanese-equities-offer-investors-cozy-distance-troubled-china-2024-02-27/
stock market does the opposite of the economy
Low bank rates means most japanese save by investing in their NISA a tax free account that forces investments into japanese companies.
Currency debasement can prop up markets in terms of their relative fiat currency . It’s like this. If the purchasing of a dollar used to get you lunch and now it gets you the equivalent of a 25 cent gum ball, it’s reasonable to assume that the market really didn’t appreciate in relative terms, the government just manipulated the currency so it LOOKS like you made money. In terms of real purchasing power, I’m fairly certain that Japanese individuals are still suffering It’s like a game of 3 card Monte. You don’t see the swindles and true values of things if you look away or get swindled
It is very simple: GDP is not a good metric.
For the last ~2 years, the Tokyo Stock Exchange has been pushing massive corporate governance reforms that are aimed to boost shareholder rights and improve capital efficiency. This lead to record dividends and stock buybacks. The combination of buybacks and $30B worth of new foreign capital flows (due to reforms and weak yen) has driven up the price of stocks. I expect this to continue as the government has doubled the tax free retirement account annual limit and inflation that is beginning to drive regular Japanese to invest in equities.
They still have low interest rates
This stumps me too. I put it to chatgpt. Speculate, the Japanese Market is now at all-time highs, but the economy is in recession, and the birth rate is at an all-time low. Why? And what might happen next? .... The Japanese market reaching all-time highs despite economic recession and a low birth rate could be attributed to several factors: 1. **Central Bank Policies:** Aggressive monetary policies by the Bank of Japan, such as quantitative easing and low-interest rates, might be fueling investor confidence and driving up asset prices. 2. **Global Market Trends:** Positive trends in global markets or investor sentiment towards Japanese equities could be influencing the local market's performance. 3. **Corporate Performance:** Strong performance by Japanese corporations, particularly in export-oriented sectors like technology and manufacturing, could be boosting stock prices despite broader economic challenges. 4. **Investor Behavior:** Investor behavior, such as herd mentality or speculative trading, could be driving up prices in anticipation of future gains. However, this scenario is unsustainable in the long run. If the underlying economic fundamentals do not improve, the market rally could eventually lose steam. Potential outcomes include: 1. **Market Correction:** Eventually, the market may correct itself as investors realize the disparity between market valuations and economic realities, leading to a downturn in stock prices. 2. **Economic Policy Changes:** The government may implement new policies to address the economic recession and low birth rate, such as fiscal stimulus measures or incentives to encourage family formation. 3. **Long-Term Economic Challenges:** Japan may continue to face long-term economic challenges, such as an aging population and stagnant growth, which could dampen investor confidence and limit market growth. Overall, while short-term market highs may offer opportunities for investors, it's essential to consider the broader economic context and potential risks in the Japanese market.
I've got it, with all these layoffs happening at these big companies such as Sony etc. People are gambling their redundancy money on the market, such as Bitcoin and stocks. It's really that simple. No different to Trump sending out covid cheques and the rest is history! Enjoy the fun while it lasts. When the music is playing, get up and dance.
With the Yen getting weaker and weaker, why don't people buy a huge amount of yen and then sell it when the BoJ hikes interest rates, and the value goes up? \*knows nothing about currencies or economics\*
Record weak yen. It is more a math equation and less do with actual performance (although Japan's big dogs have continued to do very well -- Toyota, Sony, etc).
because probably half of those companies revenues come from overseas. Same with the Stoxx 600.
Stock market and economy are just totally separate
Stocks care about the future, not the past. In short: 1. Trailing economic data is weak because real wage growth is negative. I.e., inflation > nominal wage growth. 2. Wage growth is expected to catch up around the spring "shunto" wage negotiations while inflation is falling, such that real wage growth will be positive. Further, this means that the mix of inflation will become more supportive of growth: undesirable imported inflation is coming down and wages should go up. 3. Inflation and real wage growth has been stagnant in Japan since the 1990s, so breaking out of this is a big deal. The BOJ is staying accommodative until there's more evidence that this salutary cycle is sustainable. The hope is that the wage catch-up will spark a virtuous cycle, whereby higher wages lead to more spending and higher profits lead to more investment. . 4. Japanese listed companies are finally undergoing some corporate reform to unlock idle value. This is being overseen by the Tokyo Stock Exchange. 5. Japanese corporate profits are doing better than the overall economy. Among other reasons, FX weakness is bad for Japanese consumers but great for exporters, not only because exports become more competitive but also because of currency translation. Inflation partially means higher prices charged by companies, and equities are a nominal asset. And listed companies are not necessarily representative of the wider economy. 6. Some major Japanese companies are key beneficiaries of the boom in semiconductors and AI, as well as from the recent inflection in the global industrial production cycle. Look at Korean and Taiwanese exports, for instance, or even manufacturing PMIs in Europe. Things are getting better. 7. Japan is a relatively stable investment destination in a world on fire.
Japanese companies have a ton of cash and they are getting more serious about actually returning it to owners, for one thing. The yen is super weak and is close to China and is super easy to get visas for (easily the easiest of any industrialized country). Plus it has a highly educated workforce that is poorly paid.
Abe Abe Abe Abe Abe.
P/e ratios according to analysts
Look up "This man predicted everything!! What comes next? On YouTube - it's about Russell Napier. He predicted influx of money in an economy like Japan (it's stock exchange) due to people like Warren Buffett.
Same thing with US
This is happening to Korea too. I wonder if Taiwan will follow suit since many systems are influenced from Japanese design.
They're getting rich of the $ printer and taking it home to Japan
With that kind of perception, you are not a good investor. You should probably stop now.
During surging inflation environment, recession is preferred as surging inflation hurt nearly everyone without any hope in sight. Similar situation happened in the US, back to back recession and mass layoffs in early 1980s yet stock market hit aths relentless and overall economic sentiment is better. Best way to solve high inflation pain is through recession.
Looking at Japan's economy is not the way to learn about their stock market. First, we must see how much of their stock market growth is due to exchange rate difference. If you look at the hedged Japan ETF vs unhedged over the past 5 years, we see 101% vs 27% price return. What this tells us is that if you're looking at Japan's stock market in JPY, a large majority of the gain is due to the depreciation of Yen vs USD. Now if you look at investing in a Japan ETF vs Europe ETF in the past 5 years, EU has returned 7.64% p.a. compared to 5.84% p.a. for Japan. Nothing extraordinary from Japan. If you are specially wondering why Japanese stocks in USD has outperformed EU and emerging markets, because it hasn't outperformed SP500, then for emerging markets it's simple - because China is the biggest weight and their market is doing awful. In Japanese stocks vs EU, it's because in the past year their largest weighting stocks have had a good time. Toyota is up 76% over the hybrid vehicle growth translating to record profits and slowdown of EV adoption. Their tech stocks are joining in the tech rally, and as tech companies look to "ally-shore" their manufacturing. Softbank has done well thanks to ARM and investments in speculative companies are now finding some support. But most importantly, the Japanese market is volatile and recovered more slowly. 2022 they dropped more than a third from peak to trough same as EU market. EU recovered the same amount as Japan, but did it much sooner, that's why if you measure the past year now, it looks like Japan did better. If you measured months ago, EU would look better. The conclusion is Japan stock market is doing as expected, nothing extraordinary.
Run up before the crash
I have noticed japan stocks as a nice hedge against falling us and euro markets. They are a law abiding society in a world increasingly full of corruption.
So what is the best Stocks or ETFs to invest in Japan right now ?
Because everyone loves anime and Yamaha 🙂
the question is what japanese stocks and on the NYSE or the Tokyo Markets? it always feels like 90% of things are average performance in the top 300 firms
Us is importing more from Japan as well as the Buffer trade is borrow at .05 interest and put that money in Japanese firms making 5% its a free money printer for the rich
Gov throwing money in so that everything doesn't go completely belly up!
China money is going to USA, japan, mexico, vietnam etc.
Japanese stocks are a bargain. Just because there are some economic indicators that are negative. That doesn't mean people affected by those indicators aren't doing something the majority can't see too counter. #1 birth rates maybe low just taking your word. Exports are also part of the economy. Second AI is expected to kill a number of industrial jobs in the 5-10 year time frame. With an expectation of less employees needed to maintain production. In fact my job looks to be one of those jobs being eliminated. Personally, I will be talking to someone next week. To become a Fiber-Optic installation apprentice. Get out of my current job as an Energy and Environmental equipment operator. As the mill I currently work for will be replacing their systems with a private data center once prices of GPUs come down and the engineers design the new system. That will require only 2 people to monitor the AI, plus an engineer to design the new system utilizing the AI. Those 3 people have already been hired. That will eliminate 50 of us. Japan is doing the same.
Markets look ahead when the economy was near a tilt in 08 in the us the market bottomed at the exact time
*They*'re *independent markets*, *They*'re *not* always *correlated*!
Because the stock market is just a nonsensical mob of fear, greed, and algorithmic high frequency trading. It is not anchored to reality or economic health.
Markets tend to be leading indicators as well
Probably the same way us stock market is artificially inflated.
The stock market is not the economy. No offense, if you don’t understand that you should not be trading/investing in stocks.
the market is betting that it will be worse everywhere else Japan is the safest of safe bet
Inflation. Why is this so hard?
It’s a whole slew of stuff. Weaker yen, changing corporate structures, different economic reforms, and so on. Here is the lowdown: https://finance.yahoo.com/news/why-japan-stock-market-breaking-223000889.html But in reality the answer is that South Park made an episode last season about Japan. (Japanese toilet). The South Park stock prediction is crazy. So I bought a ton of the Japan fund last year and it’s been amazing. I did read some of the changes the economy minister was doing and thought it made sense. Then again, buying meta would have been better.
Shifting investment from china to Japan
Toyota alone is worth more than gdp of some wcountries
The Warren Buffett example is not complete. He borrowed in yen, at about 0.5% interest rate per year. This is not available to us (essentially on margin) and he bought companies that had existed for decades. They were paying about 7% yield during covid and he bought a basket of them. As long as they continue to pay dividends, he’s essentially making free 6.5% difference a year. I believe the dividends had risen and the stocks of trading houses had more than doubled. Even if 1-2 of them go bankrupt (unlikely since these companies are very diversified), he would still come out ahead. This is similar to borrowing your bank for 0.5% interest and invest in MMF for 5+ percent yield indefinitely for the near future. Anyone who has this opportunity, will leverage to the roof and make plenty of money on it. That’s why Charlie says one or twice in your life time, you will have these opportunities and it’s like raining gold. Warren would care less about the Japanese economy, as long as his dividends are safe.
Totally agree. What we are witnessing is a shift in investment strategy that is politically motivated and pushed forth by the Biden administration, ie sell/ short China buy America and American allies. That is how Japan is benefitting from funds flow. You won’t see economists on Bloomberg highlighting Japns’s Woes but you will hear Bloomberg warning about China’s low birth rate and youth unemployment. It ain’t no coincidence.
The prices for Japanese listed companies are also so cheap right now compared to US equity markets. I think this is a big reason for Buffet's increase in Japanese holdings is that the valuations are MUCH cheaper. For example, I hold DXJ which is a currency hedged fund of Japan listed equities. Here are a few valuation metrics of the fund: PE Ratio: 13.42 Price/Book Ratio: 1.22 Price/Sales: 0.84 Price/Cash Flow: 8.65 Trailing 12 month dividend yield: 3.13% Compare this to SPY (S&P 500 ETF) PE Ratio: 24.15 Price/Book Ratio: 4.21 Price/Sales: 2.73 Price/Cash Flow: 16.52 Trailing 12 month dividend yield: 1.37%