The Nikkei is up another 80 pts today, that’s 1,650 pts since Dec 1 which was up 1,500 pts from November 1, which was up up 1,500 pts from September 1, which was up 1,500 pts from August 1. I am not making these numbers up, it went up exactly 1,500 pts in 3 consecutive segments!
In that same time frame, the DJIA is up 500 pts and we have the nerve to call this a rally! Japan pays the same amount of money for oil as we do as well as other materials, they have a similar population with similar lifestyles… So what do they see that we don’t?
While the Dow had outperformed the Nikkei from ’01 to ’03, they went flat together in ’04 but there was a total disconnect in ’05 where the Nikkei outperformed us by a fat 40%.
http://finance.yahoo.com/q/bc?s=%5EDJI&t=5y&l=on&z=m&q=l&c=%5En225
This is what happens when even Warren Buffet has no faith in the dollar. World investors fear that there will be a collapse in the US Asset Markets (perhaps because we have been crying housing bubble for 3 years) and, as a result, the US Dollar. This causes international investors to consider a good company in Japan to be worth considerably more than a good company in the US.
Japan is a country with a declining, aging population and rising health care costs and exploding energy prices (they are having a harsh winter). They endured Tsunami disruptions this year as well and they are just as worried about terrorism as we are (remember the Tokyo subway attack?).
I think the real difference is PR. US news is so negative and based on scandal and dirt digging that you can’t help but get the impression that this country is on the brink of disaster.
Try to name something bad in Japan – something that would stop you from investing in a Japanese company… Not much right? How about other Asian countries? Europe (maybe one or two things)? But think of reasons not to invest in the US and JACKPOT!
This is why the hottest markets are the ones we know the least about. Your broker advises you to invest in Asia or Europe and you say sure but an Asian broker tells a client to invest in the US, with it’s 6 consecutive flat years and the money is just not going to come this way…
It will take more than a change of fortune to really turn our markets around, it will take a change in attitude that will have to begin at home. It was the post WWII generation that felt we could accomplish anything that moved the markets from 1945 to 1965 but a dead president, a bad war and internal strife laid the markets low from 1965 to 1983. By 1983 Ronald Reagan convinces us that America was the greatest country in the world and took the markets through another 20 year run (cut short by 9/11).
http://finance.yahoo.com/q/bc?s=%5EDJI&t=my
As much as we like to think it doesn’t matter, the spirit of this country needs to be lifted before the markets will be able to do the same and that will require strong leadership. Until I see some of that, I will be keeping my rally flag at half mast.
