Bottom just fell out of Nikkei

http://e.nikkei.com/e/fr/marketlive.aspx

by jarek • 15 years ago

125 127 15 years ago

e.nikkei.com

wheaties2• 15 years ago

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• 15 years ago

any recommendations? Toyota?

ecuzzillo• 15 years ago

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.

jaydz• 15 years ago

While watching CNBC today I saw a story stating Toyota had to close a few factories and had a lot of damaged inventory.

dereg2• 15 years ago

You're going to want to look for a company with the least exposure to Japanese demand. You also want to see which company's plants were most disrupted by the crisis. I had the data before, I no longer look at the car industry in Japan but do some research and you'll know. Not sure if this is the time to buy any Japanese equity right now though, it's a flight away from risk and investors are indiscriminate with their funds.

netcan• 15 years ago

I remember buffet saying in some interview that Japan makes great products and has a great economy but they don't make great companies, from the investor's perspective.

secretasiandan2• 15 years ago

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.

wheaties2• 15 years ago

Yes and no. What I see is all of Japans equities moving in lock step regardless of where their manufacturing or distribution centers are actually geographically located. Much like Toyota or one of our own blue chips some of these companies are headquartered in Japan but exist all over the world. Those are the companies whose fundamentals do not reflect an equities plunge like we are seeing.

colinplamondon• 15 years ago

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

travisp3• 15 years ago

Did you buy two years ago? Because the Nikkei was lower at various points in 2009 than it is now. If not, why is this valuation better?

It's almost certain that Buffet would be actually analyzing these stocks rather than just jumping in because people may be being fearful.

citizenkeys2• 15 years ago

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.

kelnos2• 15 years ago

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.

citizenkeys2• 15 years ago

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.

travisp3• 15 years ago

And yet, Japanese stocks had 0 or negative returns for more than 20 years. In addition, even with the current drop in the Nikkei, the Nikkei was lower two years ago. What makes the Nikkei more attractive at 8600 following this major disaster than at 8000 in May of 2009 when there had been no major disaster? Did you buy then? Why or why not? Are you applying any rational financial analysis of the market, or just emotionally jumping at "oh a disaster, people must be overreacting, therefore I should buy"?

elliottcarlson2• 15 years ago

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?

idlewords2• 15 years ago

Pretend you have $100K and set up a fake portfolio, and play with that for a bit. Meanwhile put aside a few thousand dollars you can afford to lose, and when you're comfortable enough with managing your fake portfolio, start investing for real.

mleonhard• 15 years ago

I used http://www.howthemarketworks.com/ for about half a year and learned that making money on stocks is very difficult.

theoj• 15 years ago

I used Virtual Stock Exchange for a test portfolio last year. http://virtualstockexchange.com/Game/Homepage.aspx

radicaldreamer• 15 years ago

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...

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.

jarek4• 15 years ago

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.

elliottcarlson2• 15 years ago

Oh I doubt I will be jumping in to anything right now - while on one hand a low market seems tempting, I know nothing about it, so I still wouldn't take the risk. Though I will follow idlewords advice and do some pretend trading to figure things out. Thanks for the warning.

nickbp2• 15 years ago

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)

_cbsz• 15 years ago

Could you make an argument for bothering to fund 401k + IRA/Roth at 20-something? If I'm trying to get fuck-you money by 40, don't I need every dime in order to get there? My nest egg is in plain old savings right now because I view it as personal runway.

kevt• 15 years ago

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.

X-Istence• 15 years ago

Find some low dollar stocks and put a couple hundred dollars in. Don't go for the big boys yet until you understand what trends to look for and how to manage that.

I bought Atmel stock not too long ago, it has since doubled in price. I made my money and then some. I bought Jamba Juice when they were still below a dollar, they are now trading at around $2+.

I didn't put a whole lot in, means I can't lose a whole lot, and I definitely won't become a millionaire, but at least it gives me the security that I won't be screwed because I put my eggs in one basket without knowing what I was doing.

georgieporgie• 15 years ago

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)

alanpca• 15 years ago

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.

mwytock• 15 years ago

take a look at EWJ: http://us.ishares.com/product_info/fund/overview/EWJ.htm

marcusestes• 15 years ago

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

wtn• 15 years ago

It's a good question to ask, but if you have to ask it, you should probably spend more time learning about global financial markets before you take action.

josh33• 15 years ago

Careful. Japan's debt level, when compared to GDP, is higher than US: http://www.economist.com/blogs/freeexchange/2011/03/sovereig...

phlux• 15 years ago

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.

dereg2• 15 years ago

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

mixmax2• 15 years ago

The Nikkei is now at a ten year low

tansey• 15 years ago

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

[1] http://finance.yahoo.com/echarts?s=^N225+Interactive#chart2:...

mixmax2• 15 years ago

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

tnorthcutt• 15 years ago

To be fair, it was almost at a 10 year low before the earthquake, and is barely lower now than it was in August.

mikebo• 15 years ago

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

http://www.fool.com/investing/international/2010/07/22/john-...

dsl2• 15 years ago

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.

chailatte3• 15 years ago

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.

jswinghammer• 15 years ago

Wait what? There was a massive deleveraging event a few years ago and I don't remember VCs being forced to withdraw money from startup accounts. How would they do that anyway? Once they invest the money the money belongs to the company they invested in. They might be forced to sell shares I guess but they can't just take someone's money.

mediaman• 15 years ago

Chailette doesn't say they would withdraw money from startup accounts: "angel/vc investors start to panic and withdraw from the market" presumably means that startups could be deprived of the next financing stage, which, if they're still burning cash, will shut them down.

idlewords2• 15 years ago

That is some serious narcissism right there, congratulations.

chailatte3• 15 years ago

You read the post wrong. 'Specifically' is used to address how this will affect the startup industry, which pertains 'specifically' to this forum.

bradly• 15 years ago

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

chailatte3• 15 years ago

It will most likely be in currencies (look at the strong Yen) and metals (gold/silver), not in equities.

anigbrowl• 15 years ago

Many Japanese investors will be pulling out of other countries' markets, by necessity. Of course this is too complex to be summed up in a few sentences, but obviously demand patterns will undergo a major shift.

tomkarlo• 15 years ago

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.)

blhack• 15 years ago

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?

msbarnett2• 15 years ago

I think the general belief is that they are being irrationally over-pessimistic due to panic over the daiichi situation, and that this can be exploited by people whose distance affords them a more cool-headed approach.

The market as a whole may be rational, but individuals in the middle of a tense situation probably won't be.

jarek4• 15 years ago

I think part of the assumption is that people tend to trade less than perfectly when they think a radioactive cloud might be heading their way.

Right now a lot of the losses are due to uncertainty, people are factoring in risks of the unknown, potential worst case scenarios etc. If you buy in expecting the market to go back up, you are essentially betting the situation won't end up as bad as feared right now.

AngryParsley• 15 years ago

Exactly. People who make fortunes off these markets are selling. Either they're wrong or posters here are. Guess which option is more likely.

I think the LessWrong post Markets are Anti-Inductive explains it well: http://lesswrong.com/lw/yv/markets_are_antiinductive/

msbarnett2• 15 years ago

Well, it's recovered about 400 points since this was posted, so the professionals seem to have decided they were deeply into buy territory, too.

mootothemax• 15 years ago

Exactly. People who make fortunes off these markets are selling.

Only half of them are selling; you can't sell unless you can find someone who'll buy at the price you want ;)

mattmcknight• 15 years ago

Another aspect is that people actually need cash in these sort of situations and sell liquid assets to get it, while others that need cash on hand are putting less in. So, the market may benefit a long term holder of securities, but people that do or might need the money soon can't afford the short term volatility.

mikeryan• 15 years ago

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 current position.

dasil003• 15 years ago

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.

MichaelApproved3• 15 years ago

It's easier to post a buy comment here than it is to post a buy order with your broker. I doubt many of these posters have actually put in a buy order of any substantial amount.

syncsynchalt• 15 years ago

Pure coincidence, but I have a big order of VGTSX closing today. Couldn't be happier, I always buy stock on market drops.

leot• 15 years ago

I'm wondering the same thing. One estimate puts the number of houses destroyed at around 100k (http://www.msnbc.msn.com/id/42025882/ns/world_news-asia-paci...). Car ownership is around 1 car for every two people in Japan, no doubt more in rural areas. So 100,000 destroyed houses might mean 80k to 140k flooded cars. I'd guess that more than 50k extra cars are going to need to be produced in Japan to replace those that have been lost (which, though a relatively small proportion of the probably 1,000,000 cars made in Japan yearly, is nonetheless significant).

Another sad fact of this disaster is that it disproportionately affected the retired -- this too may well have consequences economically.

Economics is in part about people having productive stuff to do. If there was a work shortage in Japan before, I doubt there is now.

MichaelApproved3• 15 years ago

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!

michaeldhopkins• 15 years ago

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.

corin_2• 15 years ago

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.

streptomycin• 15 years ago

TLDR: http://www.youtube.com/watch?v=jllJ-HeErjU

sireat• 15 years ago

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.

akashs• 15 years ago

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.

geekman3• 15 years ago

> 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 years. Again long term is very long term. Same in Australia by the way. The USA and Australia of the most prosperous and successful economies in the C20. Others did far worse.

This "in the long run all will be well" argument just doesn't hold water. Not if you have a human life span.

See for more on this "The Big Investment Lie: What Your Financial Advisor Doesn't Want You to Know" by Michael Edesess. Everything a financial planner tells you may be a self-serving lie.

rtaycher• 15 years ago

Just guessing but if you are doing short term trading isn't it better to sell if you think it can go down a bit more then buy at the absolute lowest price.

seanalltogether• 15 years ago

Learn the lesson of what happened to BP after they bottomed out.

http://www.google.com//finance?chdnp=1&chdd=1&chds=1...

bergie• 15 years ago

But BP sells oil. That is inherently profitable.

geekman3• 15 years ago

> Learn the lesson of what happened to BP after they bottomed out.

By buying the panic, in effect you are selling out "of the money put options" to the rest of the market. In effect you are selling insurance policies saying things are not worse than they look. The performance characteristic of selling OOTM options is that most of the time you make money. But...

Once in a while you lose your shirt. Ask Victor Niederhoffer. What is there is a catastrophic meltdown and Tokyo has to be evacuated? What will the Nikkei be worth then? What about all the people who bought dot.com stocks after they fell 50% because they were "cheap".

When considering the merits of investment, it is worth asking:

1. Am I selling insurance to someone without realizing it?

2. Does my strategy amount to nothing more than leverage? Leverage works well in rising markets and works very badly in falling markets.

3. Are there hidden risks I am not aware of but someone else is? Or as Buffett puts it, have you been playing poker for an hour and still haven't worked out who the patsy is? (It's probably you).

4. Are you taking uncompensated risks like putting 1/3 of your net worth into one company when you could be diversified for no cost?

brown9-22• 15 years ago

Be careful of learning too many "lessons" from just one example of one company.

HSO• 15 years ago

your perception of risk may be different from others'. but the market can only express one (money-weighted) average.

also, as others have pointed out, your circumstances may differ from others'.

MichaelApproved3• 15 years ago

"Don't try to catch a falling knife" is an important phrase to remember at a time like this.

6ren• 15 years ago

Historically, markets overreact to bad news.

It depends on how bad the news really is, e.g. how damaged Japan's infrastructure actually is, as a whole. You need to judge this with facts, not on what other investors do, efficient market hypothesis notwithstanding.

FWIW, I don't know enough of the facts to make a decision. I do have a feeling that the Japanese people will rebound vigorously, as they did after WWII.

Duff• 15 years ago

People behave irrationally during panics. Through a little bit of cleverness on my part and alot of luck I found myself sitting on cash when Lehman collapsed.

So faced with the prospect of fiscal apocalypse or (I had friends pulling money out of banks) the buying opportunity of the century, I bought a bunch of equities that were punished by the collapse, and made a bunch of money.

kmfrk2• 15 years ago

I don't know if shorting is allowed in Nihon, but maybe someone's doing that more pervasively than those buying stocks.

IdeaHamster• 15 years ago

"Investors should remember that excitement and expenses are their enemies. And if they insist on trying to time their participation in equities, they should try to be fearful when others are greedy and greedy when others are fearful."

-- Warren Buffett

EliRivers• 15 years ago

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 investors _are_ ignorant. Many are stupid. Many are prone to panic. They are prone to everything that all other humans are prone to. Many are in fact big funds that have preset automated buying and selling positions and would happily buy and sell regardless of what else is going on.

As evidence, I point to every bubble and crash there has ever been.

kevinpet• 15 years ago

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.

math• 15 years ago

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.

gte910h• 15 years ago

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.

purewater• 15 years ago

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! :)

pero6• 15 years ago

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.... 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.

orangecat• 15 years ago

Disasters like this are, in theory, actually beneficial to economies

In very bad theories, yes.

pero6• 15 years ago

Or very poorly architected economies?

carsongross• 15 years ago

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!

pero6• 15 years ago

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.

brown9-22• 15 years ago

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.

printerjam• 15 years ago

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.

commanda• 15 years ago

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...

steveplace• 15 years ago

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.

travisp3• 15 years ago

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

Bottom just fell out of Nikkei

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