Friday, Nov 16, 2007
Stocks crash coming very soon
The Telegraph: The Stock Market and the Yen
If the EUR YEN breaks through the 1.59 (last hit on 12 Nov) barrier in the next fews days then IMHO the carry trade will implode and stocks tumble to below August's lows
It is at 160.99 ad 10:10 AM
http://newsvote.bbc.co.uk/1/shared/fds/hi/business/market_data/currency/13/14/default.stm
The UK IR cuts have been signalled for early next year. Get your savings out of GBP and into gold or yen. The GBP has only one way to go - down.
Posted by sold 2 rent 1 @ 08:26 AM (814 views) Add Comment
8 Comments
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1. drewster said...
For anybody interested in investing in Japan, you can buy an index-tracking ETF (exchange-traded fund) in the Nikkei. The ticker symbol is IJPN, it trades on the LSE so it should be available from all UK brokers. Merryn from MoneyWeek likes Japan too, and there's an article about it on the Motley Fool american edition here: http://www.fool.com/investing/mutual-funds/2006/11/16/the-best-etf-for-2007-ishares-msci-japan-index-fun.aspx
That said, it's fallen 8-10% since I bought it earlier this year. I'd have been better off buying a house..... nah just kidding!
2. sold 2 rent 1 said...
drewster,
Whilst I am no financial advisor, a Nikkei tracker fund looks like a loser to me.
Merryn has been pumpng Japan for a while now, expecting it to emerge from its own k-winter after 17 years.
Unfortunately Japan's 5 year expansion has come to a grinding halt this summer.
The benchmark Nikkei 225 index has fallen 15pc over the past month and stocks in Tokyo have fallen more than 20pc since the Japanese market hit a seven-year high in July
Japan battered by credit whirlwind
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/11/14/cnjapan114.xml
Japanese housing starts fell 23.4pc in July and 43.4pc in August as new laws came into effect. That comes after an outright contraction in GDP of 0.3pc in the second quarter.
http://blogs.telegraph.co.uk/business/ambrosevanspritchard/oct07/thisbearisnotcapitulating.htm
The motley fool article is a year out of date.
As the yen rises its export economy will suffer.
It still has household debt at 130pc of GDP (compared to the UK of 160pc)
National debt is 170pc of GDP (compare to UKs 40pc)
IMHO invest in the yen, not in the Nikkei
Merryn may have to back-track on the Nikkei in the near future.
3. Icarus said...
"Ultra-cheap Yen courtesy of Japan's near-zero interest rates has funded the purchases of equities throughout the world". There's nothing new in this, so why did Swervyn call the high level of stockmarkets "surprising" in his announcement the other day?
4. inbreda said...
oanda.com for currency investing.
5. Tenchama said...
I expect the Yen to go from today's 225 to the pound to less than 200 over the next few months.
The Yen carry trade is dooooomed! I also wouldn't touch stocks...
6. Drewster said...
Thanks for the advice, s2r1. Perhaps I trusted Merryn too much; I certainly can't see any strength in the Japanese economy. Merryn described it as "an investment for the true contrarian", but then by that logic so is Zimbabwe! Japan specialises in manufacturing mostly discretionary goods such as high-end electronics and quality cars. With the american consumer-led downturn, these will be first to fall. The hope rests on China taking up the demand from America, but China are too busy sorting out the basics like food and infrastructure before they'll want shiny new plasma TVs. Japan's home demand will continue to be weak, for all the reasons you stated.
7. sold 2 rent 1 said...
Merryn is pretty good on most things, but like most individuals making a u-turn on a decision can take time.
A prime example is David Smith's correct call on "no HPC" in 2004-5. The success went to his head and will bite him in the ass eventually. Either that or he just doesn't understand secular cycles and long wave debt cycles.
8. drewster said...
But David Smith was actually correct in 2004-5. He's wrong now though. It's really all about timing, a stopped clock is right twice a day. Maybe Japan will rise again, but if it's not in the very near future then there's no point investing there. Gold on the other hand is rising now. Food, farming, and fishing are starting to rise too. My philosophy with investing is to jump on bandwagons just after they've started, not before (too early) and not once every shoe-shine boy is on board (too late).