The Land of the Rising, Sinking, Rising Sun

You probably don't care about this but you should so I'll go into it.  Japan.  Back in the 1980's when you were just getting started you did not notice that the US was going down the tubes and Japan was going to rule the world.  It was like they won World War II. 

There was an oil crisis so little Japanese cars, like today, were the rage.  There were tons of books about Japanese quality and Japanese management techniques and culture that we, being the US, should emulate.  The Japanese love land since they have so little of it and they ended up paying huge amounts for Tokyo real estate along with Rockefeller Center in New York and the famous Pebble Beach golf course in Monterray.  Which was ok with us because most of our cities were going to turn to rust and blow away.  Starting in Chicago and moving east the industrial belt became the Rust Belt and doomed.  Or so we thought.

And it didn't happen because Japan imploded.  Real estate busted.  We bought back our real estate assets for pennies on the dollar.  Their stock market tanked and ours went up.  Ours went up because we did not emulate the Japanese methodology, we stole it and changed it and made it work, for the most part, for us.  We cut costs, improved quality, and outsourced.  Not all good and very painful but the Japanese forced our system to the wall and we reacted, finally.

They didn't.  The Japanese stock market went down about 75% and the economy shrank because their people started saving everything for a rainy day.  And their cost structure got out of whack because they had life time employment which means no new jobs for young people and stupid make work jobs for old people.

Finally, change is constant and Japan is changing for the better.  The Japanese growth rate is now near ours at over 5%, the central bank has raised rates from zero because there is some consumer demand, and unemployment is down meaning more jobs for young people who spend money.  The stock market is up 50% from a year ago but still more than 40% below its all time high.

One investment manager likes Japan because (and pay attention here) "he likens today's Japan more to the U.S. of 20 years ago than to Japan itself in the high growth years following World War II."

Hmmm.  Twenty years ago.  The US was in the tank 20 plus years ago.  And if you bought in to the US stock market then you would have had a 20 year upside run.

The lesson here is not so much about Japan but looking for markets that nobody is looking at.  They may not be such good markets but they may be changing for the good and they may be a bargain.  "Buy when the blood is running in the streets." 

You usually won't find a bargain at Nieman Marcus.  You may at Ross.  Stocks and investments are no diffferent.  Just look at Japan.