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Bottom just fell out of Nikkei

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Re: Bottom just fell out of Nikkei

#121

Post by brown9-2 »

carsongross wrote: post #84
pero wrote: post #77

Disasters 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…

Only an economist can consider a theory like that for more than a few seconds and not laugh hysterically. As Tom Woods has said, following this logic, the best thing we could do for our economy is build a huge armada of amazing battle ships, have Japan do likewise, then float them to the middle of the pacific and, after evacuating them (surely, the loss of human life is not a necessary component in this economic mode…

I actually believe this is a bit of an insult to economists. I don't believe most mainstream economists would consider anything involving loss of life on a large scale "a good thing", just those that dabble in economic theory.

Re: Bottom just fell out of Nikkei

#122

Post by math »

blhack wrote: post #41

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?

You're pretty much saying you think markets are efficient. Some others are pretty much saying they think there is a predictable panic sell component in current prices (and likewise in other bad news events). Maybe the latter is often true. Actually I believe it is possible for someone to have sufficiently good judgement to consistently make money from market overreactions. In this case, I personally don't have a clue - there too many uncertainties for me with this one.

Re: Bottom just fell out of Nikkei

#123

Post by secretasiandan »

colinplamondon wrote: post #118
secretasiandan wrote: post #106

Earlier quoted context omitted.

You must think markets are pretty inefficient. Can you explain why this is time to start buying? If you can explain why people are selling so much so fast right now, that might help your argument.

They are inefficient - that's the entire basis of George Soros' investment strategy.

efficient > slightly inefficient > inefficient > pretty inefficient

My comment was not meant to start a conversation about the meaning of efficient markets, but to get wheaties to explain his reasoning.

Re: Bottom just fell out of Nikkei

#124

Post by michaeldhopkins »

MichaelApproved wrote: post #66
blhack wrote: post #41

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?

A large drop in a market usually triggers sell orders that were put in place dropping the market further which trigger more sell orders and so on. Many people who are levered don't have the capital to withstand this type of drop and get washed out causing further selling. It's a chain reaction that eventually cools off. Let's hope their fuel rods do the same!

Usually, eh? I assume you have bought your put options?

This can be true, but remember that you don't know where the sell orders are placed. We could have already seen the trigger and the corrpesponding drop-off.

Also, remember that many investors believe this, so they put buy triggers below where they think sell triggers are. Also, there are value investors who place buy triggers without regard to the existence of sell triggers.

I'm not saying that the phenomenon you describe does not exist here, and I acknowledge it has happened in the past. But you need to qualify axioms like that to see if they apply to new situations.

Full disclosure: I made a small-but-quick profit on the Nikkei today.

Re: Bottom just fell out of Nikkei

#125

Post by sireat »

corin_ wrote: post #69
blhack wrote: post #41

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…

The thing is, what if Steve Jobs couldn't return to Apple at all? So market was pricing that possibility into the price of Apple stock.

  There is a legitimate concern, that without Jobs to supervise things, in a year or two, the "magic" of getting the right product out at Apple would be gone.

  Sure, Apple would still be making money, because Tim Cook is a great COO, but the "vision" would slowly fade.
Think, Microsoft over the last 10 years(stock basically has stayed put). Microsoft still makes money, but it has a lot of misses to show for its hits. Meanwhile, Apple has been hitting them out of the ballpark.

  Remember, when you are buying Apple stock you are paying a premium on the expected growth.

Re: Bottom just fell out of Nikkei

#126

Post by [deleted] »

pero wrote: post #85
carsongross wrote: post #84

Earlier quoted context omitted.

Only an economist can consider a theory like that for more than a few seconds and not laugh hysterically. As Tom Woods has said, following this logic, the best thing we could do for our economy is build a huge armada of amazing battle ships, have Japan do likewise, then float them to the middle of the pacific and, after evacuating them (surely, the loss of human life is not a necessary component in this economic mode…

Empiricism is not on your side. The richest country in the world spends more than its fair share on 'a huge armada of amazing battle ships', actually, as much as everyone else on the planet put together, and also actively seeks out remote spots of the planet to blow stuff up in. Rinse, repeat, very rich.

[deleted]

Re: Bottom just fell out of Nikkei

#127

Post by sunchild »

dasil003 wrote: post #65
mikeryan wrote: post #60

Earlier 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.

People who need cash will sell at a depressed price. People who have cash will buy from them. The overall optimism for Japan's recovery is likely to be based on at least some hard facts: Japan is a leading national economy on the world stage, historically a huge producer/innovator, and proved after WWII that they can recover fast and big. Not a bad bet, barring another catastrophe such as earthquake further South, pan-Asian war, etc.

Re: Bottom just fell out of Nikkei

#128

Post by gte910h »

blhack wrote: post #41

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?

I'm assuming a huge percentage of the people who were holding these securities live in Japan, and need cash right now to fix their broken lives.

Re: Bottom just fell out of Nikkei

#129

Post by kevinpet »

EliRivers wrote: post #119
blhack wrote: post #41

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?

A number of prices will be going down because of reduced dividend expectation. Companies that are about to make a big loss due to natural disasters are going to reduce dividends, so the shares are actually worth less than they were a week ago. That said, the "efficient market hypothesis" of which you speak; that is, the idea that any and all future price rises and falls have already been factored in - is false. Many…

Bubbles are produced by rational small-scale behavior. That's the fascinating thing about bubbles. The "greater fool" theory is frequently a good bet. Except, of course, when there is no greater fool and you're left holding the bag.

More importantly, outside events or circumstances could mean there isn't money in the right place to be able correct market price mistakes.

Re: Bottom just fell out of Nikkei

#130

Post by Vivtek »

geekman wrote: post #100
akashs wrote: post #76

Earlier quoted context omitted.

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 rela…

> know that it will recover, whether it's over 1 year, 2 years, or longer Let's put this in perspective. The Nikkei is down 80% over the past 21 years. At an optimistic rate of increase of 6% from now, it will be another 25+ years before it hits 38957 again. All up, over 45 years. Have a look at Shiller's house price graph. From 1890 to 1955 there was zero real increase - and large falls in the meantime. This is 65 y…

Not if you have a human life span.

Aha - there's our problem!

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