It seems like everybody in this thread is saying "No duh, invest in Japan right now!" The assumption is that the market will turn around, and anybody who buys into Japanese companies stands to make a lot of money. If this is the case, then why are the prices going down at all? Are other investors really that ignorant?
Happens so, so often. A great example (very YC suited!) is Apple's stock prices in January. When Steve Jobs announced his medical leave just under two months ago, the Apple (AAPL) price opened the next day (Tuesday) down 5.44% on Friday's close price. The low point on Tuesday was 6.45% lower than Friday's close price. While the price did go back up a bit that same day (the Tuesday close was only 2.25% lower than Frid…
Bottom just fell out of Nikkei
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Re: Bottom just fell out of Nikkei
#72Earlier quoted context omitted.
Here's a list of companies "from or based in Japan": http://en.wikipedia.org/wiki/List_of_companies_of_Japan Sony, Toyota, Honda, Nintendo, etc. Japanese companies like these that were a great investment a week ago are still a great investment. Only now the stock is less expensive because of a temporary panic. Smart money is buying up all the stock possible for these companies before they can rebound.
The big question is how the operations of each of those companies is affected. If operations are hugely impacted and would require time to rebuild, their stocks will not rebound so easily.
Good point, but if you consider corps like those mentioned by the parent, they are clearly internationally-diversified companies. If their operations in Japan alone are impacted, it's cause for concern, certainly, but the company as a whole is likely none the worse for wear, and this is just Mr. Market overreacting as he likes to do.
Re: Bottom just fell out of Nikkei
#73Earlier quoted context omitted.
If you are already invested in Japanese equities the "safe" play is to try to take some cash off the table to defend against what could be a bleak revenue picture in the near future. If you are not yet in that market then there might be a long term play investing when these stocks are weak. Id assume most here who advocate buying are in this boat. Both buying and selling may be the correct play depending on your curr…
Aren't those sunk costs though? Isn't the real question whether the market's information is overly optimistic or overly pessimistic? Given perfect information in the market wouldn't we expect it to be 50/50 based on true uncertainty about the future? These aren't rhetorical questions, this is just my line of thought based on my relative ignorance of investing.
Person A has lost 50% of assets in Japanese stock, and cannot afford to drop to 30%. Person B has money they're interested in investing long-term, and is not afraid to take a 40% hit up-front for the possibility of a long-term 20% gain.
So there we have perfect information about the stocks' long-term performance, but two situations in which both buying and selling the same stock is wise, or at least understandable.
Re: Bottom just fell out of Nikkei
#74Earlier quoted context omitted.
and they just lost ~1 trillion ++ worth of infrastructure... I believe they have a 10 year rebuild in front of them. This is assuming that we have hit bottom on the catastrophe over there now and that we can contain the Daiichi plant. It would be very interesting though, if things turn south and some massive takeovers occur in the next 12 months. Imagine companies like Fujitsu, Hitachi or others (my mind is blank) be…
Currency? Do you have a source on revised infrastructure damage figures, because I've only seen $100-150 billion estimates by some insurance companies.
Christchurch is $12b, and there have been whole cities leveled in japan, a whole prefecture is majorly affected if not downright destroyed.
$150b seems very low.
Re: Bottom just fell out of Nikkei
#75Can someone share the best way to enter the stock market for someone who is completely clueless on stocks in general yet wanted to dabble in them for quite some time?
Put your money into a Vanguard (lowest maintenance costs) targeted retirement account and leave it there. Dabbling in stocks is a good way to lose money.
(by all means, trade stocks if you're serious, but if you're serious you wouldn't ask)
Re: Bottom just fell out of Nikkei
#76It seems like everybody in this thread is saying "No duh, invest in Japan right now!" The assumption is that the market will turn around, and anybody who buys into Japanese companies stands to make a lot of money. If this is the case, then why are the prices going down at all? Are other investors really that ignorant?
You're correct in pointing out that we can only be buying if someone is willing to sell to us. However, one big factor is your time horizon. For average investors like ourselves, if you're investing for the long term / retirement, you generally know that it will recover, whether it's over 1 year, 2 years, or longer. It may go down further, but will it be in the same state 30 years from now? Probably not, so it's relatively safe to buy in at a "discount".
Contrast that to hedge funds, investment banks, and other investment groups that have investors to please and targets to hit in the immediate/short term. For them, their time horizon is shorter and 1) they need to free up cash and 2) they cannot take the risk of holding on because the economy is definitely impacted in the short term.
Re: Bottom just fell out of Nikkei
#77Disasters like this are, in theory, actually beneficial to economies--especially stagnant ones like Japan's. The capacity for immediate bonafide economic growth has been diminished but that doesn't mean that economic production will decline. There is now ample room to deploy all that surplus capital (humans, machinery, money) that was previously unproductive. The upper echelones of the financial sector will make a killing shorting and re-buying.
Advanced reading on a parallel concept: http://www.irows.ucr.edu/conferences/globgis/papers/Arrighi.... The quoted and cited David Harvey piece (2007, albeit the condensed article veresion and not the full-length book) would have been a better reference however is apparently no longer online. This, though, is amazing: http://www.youtube.com/watch?v=qOP2V_np2c0
I believe Naomi Klein made a good buck on dumbing down and re-orienting the above hypothesis.
Re: Bottom just fell out of Nikkei
#78Can someone share the best way to enter the stock market for someone who is completely clueless on stocks in general yet wanted to dabble in them for quite some time?
Unless you really want to play with buying/selling individual stocks, you're probably best off buying a broad-based index fund, which effectively buys you a slice of the entire stock market. Eg VTSMX/VTSAX Also, are your 401k and IRA/Roth fully funded? Be sure to do that first. (Assuming USA resident here)
To add to Nick's point, you can read Random Walk Down Wall Street to get an understand of why buying an index fund is probably a good idea for you. It boils down to the fact that the market is fairly efficient "most" of the time (hard to find deals), and by trading you are already at a disadvantage against the market because you will likely pay more commission and pay more taxes (based on your trading volume of course, but generally speaking, buying index funds are extremely efficient in both these two areas). To over come this and still beat the market as a whole (over a long period of time and risk-adjusted) is a extremely difficult. You have to be very very skilled to accomplish this. Most pros do not accomplish this in their careers (even though it may be due to other factors such as incentive structures, but that's for another discussion). So realistically speaking, you will have to invest a lot of time to become "good enough", which means it will only be worth while if you are trading a significant amount of money. Even Warren Buffett, who's an evangelists for value investing recommends investing in index funds for most people. And the last and most important thing to remember is that yes, people make money from the stock market all the time just like how people make money from the casino all the time. It doesn't mean it makes sense risk-adjusted, and that it can be done over a long period of time.
Re: Bottom just fell out of Nikkei
#79Disasters like this are, in theory, actually beneficial to economies--especially stagnant ones like Japan's. The capacity for immediate bonafide economic growth has been diminished but that doesn't mean that economic production will decline. There is now ample room to deploy all that surplus capital (humans, machinery, money) that was previously unproductive. The upper echelones of the financial sector will make a ki…
Disasters like this are, in theory, actually beneficial to economies
In very bad theories, yes.
Re: Bottom just fell out of Nikkei
#80Disasters like this are, in theory, actually beneficial to economies--especially stagnant ones like Japan's. The capacity for immediate bonafide economic growth has been diminished but that doesn't mean that economic production will decline. There is now ample room to deploy all that surplus capital (humans, machinery, money) that was previously unproductive. The upper echelones of the financial sector will make a ki…
Disasters like this are, in theory, actually beneficial to economies In very bad theories, yes.
Or very poorly architected economies?