

Bottom just fell out of Nikkei - jarek
http://e.nikkei.com/e/fr/marketlive.aspx

======
blhack
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?

~~~
corin_
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 Friday's close price), it kept dropping for a few days. By
the time the markets closed on Friday, AAPL's price was 326.72, down 6.24% in
a week (compare that Friday close price to AAPL's lowest price on Tuesday,
which was 326.00).

For some reason, investors were selling Apple stock because of fears over
Jobs. This seemed ridiculous to me, and sure enough, in the (nearly) two
months since then, the market has shown that I'm not alone in that view.

If you bought AAPL stock at that Friday closing price and sold right now,
you'd be selling 8.21% higher than you bought. Even if you didn't time the
buying quite as well, so didn't get it at such a low price, if you bought it
at the opening price on Tuesday (the day after the Jobs announcement) you'd
have made 7.30% profit, or if you bought it at the closing price on that same
day and sold now, you would have made 3.79% profit.

So even with pretty shit timing on when to buy, just by having faith that
Apple stock would bounce back, that's a very healthy rise in value over just
two months.

The cause (I think) of the problem is two-fold. For starters, people are
afraid that, if they buy back in too early, they will be too far ahead of the
market and prices will continue to drop - obviously, they're hoping to be just
a tiny bit quicker than the market, buying just before prices start going back
up again quickly.

The second reason is basically the same, but with a different approach. Rather
than wanting to avoid having your shares devalue immediately after buying
them, it's a case of not wanting to buy back in too soon because, the lower
the price you pay, the bigger the return once they have bounced back.

~~~
sireat
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.

~~~
corin_

      in a year or two
    

And yet the stocks have bounced way up in under two months. The only way that
wasn't going to happen was if Jobs died, or perhaps if he announced a
permanent retirement. Neither of those things were going to happen so quickly
after the announcement, otherwise they wouldn't have announced it the way they
did.

So yes, the market _was_ pricing that possibility, but it was obvious that in
no time at all it would forget about it and go mad over the Apple's short-term
future. Sure enough, it did.

------
josh33
Careful. Japan's debt level, when compared to GDP, is higher than US:
[http://www.economist.com/blogs/freeexchange/2011/03/sovereig...](http://www.economist.com/blogs/freeexchange/2011/03/sovereign_debt)

~~~
phlux
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) being
bought up by the IBMs Apples or even Google or GASP facebooks (those who have
a lot of cash to buy tech houses in Japan and picot into HW?)

Pure fantasy sure - but so was the SCIFI scenario we are now looking at today,
just last week.

~~~
dereg
Currency? Do you have a source on revised infrastructure damage figures,
because I've only seen $100-150 billion estimates by some insurance companies.

~~~
masklinn
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.

~~~
Ratfish
The Christchurch figure is a debatable one, as the government is talking it up
so as to justify an asset sale (national park mining and power companies are
current favourites) while the true figure seems unknown (I can't find a good
source, any you know of?). The EQC only pay part of some claims, but here are
their stats <http://canterbury.eqc.govt.nz/repair-replacement/progress>

------
wheaties
Time to start buying. Bet Buffet is taking a look at all those wonderful
Japanese companies who moats are wide, have good fundamentals, and produce
reasonable free-cash flow. Hope his "itchy trigger finger" found a few
targets. My IRA could use a boost after the last few years.

~~~
awa
any recommendations? Toyota?

~~~
ecuzzillo
Toyota's stock is probably undervalued to begin with because of the stupid
pedal thing, and this probably makes it extreme. Short-term traders need not
apply, though.

~~~
lionhearted
Toyota's trading at 21 times earnings on the NYSE... that doesn't seem like a
crazy bargain. (Or is there some parallel listing on the Nikkei?)

~~~
patio11
Toyota is listed on the Nikkei. The thing at the NYSE is called an American
Depository Receipt (ADR). Basically, it is a coupon that says "Entitles the
bearer to two shares of Toyota common stock in Japan."

In principle, the two do not necessarily have to move in lockstep. However,
because of the massive size, prominence, and stability of Toyota, one would
ordinarily expect them to correlate extraordinarily heavily as anything else
is an exploitable arbitrage opportunity.

~~~
spitfire
Various algorithmic traders play on these dual listings. Put a computer in
between (in network terms) and you can trade ahead of the people in either
japan or new york.

and of course you can also do regular pairs trading (if they drift farther
apart).

------
citizenkeys
There's no better time to buy stocks than during a market panic. Japan is a
wealthy country. The Japanese work ethic is unbeatable. Now is a great time to
buy Japanese stocks.

~~~
kelnos
Be careful. Good work ethic doesn't always mean business success. The two are
correlated, but that doesn't suggest that tossing money at any Japanese
company is the way to go. Still do your due diligence and only invest in solid
companies. This is certainly an opportunity, but not a reason to be
irresponsible.

~~~
citizenkeys
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.

~~~
PakG1
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.

~~~
kelnos
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.

------
mikebo
Be careful - "John Mauldin: Japan Is a Bug Searching for a Windshield"

[http://www.fool.com/investing/international/2010/07/22/john-...](http://www.fool.com/investing/international/2010/07/22/john-
mauldin-japan-is-a-bug-searching-for-a-windsh.aspx)

~~~
dsl
A smart man no doubt, but taken out of context for the current discussion.

He is talking about long term deleveraging in many different countries. His
outlook for the US is just as grim.

------
commanda
The ad I saw on the right side seems highly inappropriate. Or, perhaps,
appropriate - I'm not sure.

[http://adb.nikkei.co.jp/ad/logo/2008b/NikkeiWeekly080722-NNI...](http://adb.nikkei.co.jp/ad/logo/2008b/NikkeiWeekly080722-NNILargeRect.gif)

------
alanpca
How does one invest in the Nikkei 225 in the USA? I'm looking for an Exchange
Traded Fund (ETF) type of deal. I see that there are a couple mutual funds
(UJPIX) but I'm more interested in something on one of the US markets.

~~~
marcusestes
Good idea. iShares markets an ETF called the Japan Index Fund that tracks a
broad range of indexes:
<http://us.ishares.com/product_info/fund/overview/EWJ.htm>

------
steveplace
REMEMBER: This is probably not the best place to get investment advice.
Everyone's got an opinion but it's different when you've got actual cash on
the line.

------
elliottcarlson
Can 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?

~~~
radicaldreamer
I'd be very careful, if you're not experienced at all, you could get wiped out
pretty easily in a market with this much volatility. A lot of people would've
said today's trading session was a great day to buy, but look what happened.

This is what they call a Black Swan event and nobody's sure that we've seen
the bottom yet.

Edit: If you want to see an example of how these drops can be deceiving and
might not represent the true bottom, look at Citi's chart:
[http://finance.yahoo.com/echarts?s=C+Interactive#chart2:symb...](http://finance.yahoo.com/echarts?s=C+Interactive#chart2:symbol=c;range=5y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined)

You don't want to be the guy who bought a large long position when the PPS was
$20, thinking it would easily jump back up to 30 or 40.

~~~
jarek
Yes - especially since right now everyone and their broker are thinking of
ways to get in at those prices. Chances of you getting a decent deal while
it's still around are slim, especially if you have no prior knowledge. If you
don't know enough to know who the fool is in the market, you are the fool.

~~~
PakG1
True story, probably experienced by thousands of people. Know someone who was
into daytrading stocks and such. He had a home, no mortgage, no debt. Ended up
losing the home. Wife left, took the kids. Wife eventually came back with the
kids, they live a simple life now in some apartment. Life is not what it was,
but they're getting by.

If you don't know what you're doing, you can lose everything. When you talk
with truly successful traders (I know one who makes a million a year or more),
you learn to appreciate that doing it well is difficult and requires a
discipline that few people have.

~~~
jarek
The trick to getting rich is trading with _other people's_ money.

You win, you get commission. You lose, it's not your money.

~~~
PakG1
This fiduciary disconnect can create a lot of malevolent market behaviour if
controls aren't in place. And more often than not, controls aren't in place.

[http://blogmaverick.com/2008/11/13/the-hedge-fund-
disconnect...](http://blogmaverick.com/2008/11/13/the-hedge-fund-disconnect/)

------
printerjam
This is a tough bet. My first reaction was, "They are going to open up their
wallets and spend like crazy to rebuild." Then I heard on the news that Japan
runs a massive fiscal deficit and I thought, "Where are they going to get the
money." When the market cools, it might be good to pick individual stocks
(construction and pharma come to mind). Right now though, staying out of the
broader market (index funds, etc.) might be prudent.

------
purewater
Thanks for posting this. I like to buy into crashes (with some safety margin
if I'm wrong). +$4k on the SGXNK so far because of your great timing! :)

------
pero
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 killing shorting and re-buying.

Advanced reading on a parallel concept:
[http://www.irows.ucr.edu/conferences/globgis/papers/Arrighi....](http://www.irows.ucr.edu/conferences/globgis/papers/Arrighi.htm)
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.

~~~
carsongross
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 model, is it?) blow them all up.

Rinse, wash, repeat. We're all rich!

~~~
pero
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.

~~~
jeffb
When you talk about the richest country in the world, are you referring to
Qatar or Luxembourg?

According to the IMF and CIA World Factbook, Qatar has the highest GDP (PPP)
per capita. According to the World Bank, it's Luxembourg:
[http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(PPP)_...](http://en.wikipedia.org/wiki/List_of_countries_by_GDP_\(PPP\)_per_capita)

~~~
pero
Nah, neither, I was using raw GDP. Those countries don't have politico-
economic systems which funnel large chunks of their populations into either
incarceration or the military. Forbes list also seems appropriate for the
discussion given the 'very rich' theme going on.

Care to dig up those rates/expenditures per capita?

------
travisp
The Nikkei is still higher than it was two year ago.

------
mixmax
The Nikkei is now at a ten year low

~~~
tansey
No it's not... it's not even at a 2 year low.[1]

[1]
[http://finance.yahoo.com/echarts?s=^N225+Interactive#chart2:...](http://finance.yahoo.com/echarts?s=^N225+Interactive#chart2:symbol=^n225;range=2y;indicator=volume;charttype=line;crosshair=on;ohlcvalues=0;logscale=on;source=undefined)

~~~
mixmax
The Nikkei 300 is, you're linking to the nikkei 225.

The nikkei 300 index is _"The Nikkei 300 is a market value-weighted index of
the 300 major issues on the first section of the Tokyo Stock Exchange (TSE).
The Nikkei 300 uses a weighted average based on market capitalizations of
component firms to reflect movements in the overall value of first section
stocks. This contrasts with the widely followed Nikkei Stock Average which is
an average price and is suitable for monitoring the level of the market and
its changes._ (1)"

The Nikkei 225 index is _"The Nikkei Stock Average is the average price of 225
stocks traded on the first section of the Tokyo Stock Exchange, but it is
different from a simple average in that the divisor is adjusted to maintain
continuity and reduce the effect of external factors not directly related to
the market(2)_ "

Nikkei 300 on Google finance: <http://www.google.com/finance?q=TYO:1319>

Sorry for the confusion.

(1) <http://e.nikkei.com/e/fr/info/nifaq/300.aspx>

(2) <http://e.nikkei.com/e/fr/info/nifaq/225.aspx>

~~~
nandemo
Nikkei 300 is not widely used. Without qualification, "Nikkei" is taken to
mean "Nikkei 225".

------
chailatte
This will trigger deleveraging around the world. Specifically, this will
impact the venture capital in silicon valley. We'll likely start to see some
angel/vc investors start to panic and withdraw from the market, shutting down
startups, etc.

~~~
bradly
Wouldn't the money pulled out of Japanese markets be invested in other
markets?

~~~
tomkarlo
Not necessarily. For every dollar being pulled out there also a lot of lost
value due to the declining prices. Many investors follow a "basket" strategy
where if one market goes down they will allocate more money to buying there
and pull it out of other areas such as private investments.

This _has_ been seen in prior US public market downturns - if a pension fund
is allocating 90% to public market investments and 10% to private investments,
and the public market drops 33%, their fund is now split 60/10 instead of
90/10. So to rebalance back to 90/10, they'll need to liquidate 33% of their
private investment allocation and move it to public investments. (This is an
oversimplification but you get the idea.)

