N&Q1 - Gertie’s Advice
The land of the rising sun and a first-class ticket to Fukuoka. Japan has an excellent GDP, social peace, and technology in overdrive. When you want to see the future of our handhelds, see what’s on the Tokyo street. It’s like Paris fashion: three years ahead of the striving American midwest. The Japanese are hardworking, ingenious souls who juggle toil and leisure, art and life. Right? Their culture makes us look like Johnny Jump-Ups. Who could resist an invitation to visit and invest.
So Greg recycled his VISA and bought us lovely seats aboard JAL and then at the Fukuoka Kokusai for the November sumo tournament, the premium bout of the year.
That was in 2004. I was wary. This wasn’t the first time a broker has set his sights on little me. But Greg was as polite as, well, he needed to be. And Japan was plowing its hard-earneds back into the pockets of the people who were buying their products. They were investing in American funds that loaned to the financials that loaned to consumers. And consumers were buying Japanese products like they eat potato chips. The Japanese in Fukuoka took cash at both ends: Americans bought their cars and electronics, and then paid them interest on the money they borrowed to buy. Plus that extra touch of reassurance. The Japanese couldn’t go ballistic, because they had their economies strapped into the American dollar. If the dollar slid too much, the Americans would repay their lenders with depreciated assets. No fun on the Japanese side. Everyone had to play fair, which puts money in the pockets of friendly folk like us.
I confess I placed a dollar or two in the main players, the giants like Yamaha and Nintendo. The Shinto gods like big men, that’s why they like sumo wrestlers. I ponied up $100,000. This was new terrain for me. But my Japanese shares soared 50% in 2005 and I sold half. 2006 was more realistic. The market gained 5% overall with major roller-coasters. I don’t watch the markets every day or even weekly. Stick to the fundamentals, I say, and let the cowards bail.
Which brings me to today’s lesson, as my Pastor father used to say. Nothing has changed. America was entering a recession in late 2006 and still is now. Watch for really bad news around the time of the Presidential election. The subprime problem hasn’t gone away, because it really wasn’t limited to subprimes. Lenders are overextended. Any threat to repayments and they shout for assistance. Even worse, the extent of risk is concealed by the re-investment and re-assurance practice of funds and trusts. Nobody knows where they stand and everyone is consequently nervous and prepared to cry wolf. These aren’t the worst circumstances one can imagine, but they aren’t the best either.
Is Japan the answer? No, love, I’m afraid not. Japan is too dependent on the American consumer. But what’s a clever analyst to do? Where do we safely store the millions we’ve acquired against a rainy day?
Japan’s stock markets are big and liquid. Its companies are enormously successful and proven in fair weather and foul. They make what we need and want. And they’re pointed at the future: the most successful green companies are Japanese. Or if you think the future lies elsewhere, consider that Honda and Yamaha make huge profits out of the developing world. If you want a slice of the Chinese and similar markets, without the risk, you could do worse than a large Japanese manufacturer.
At bottom, we can’t avoid the fallout from a worldwide financial catastrophe. If it happens, the best we can do is ride it out and position ourselves for the upsurge. The question isn’t how to make money, but how to lose as little as possible. We could do worse than place a little green with the best players in the business.
Which reminds me, anyone out there interested in a brains-for-hire company that is vastly underpriced? The Shinto gods are watching.
(by gertie. Check out http://gertieg.com/ and http://moneylet.com)
