Nikkei 225 vs S&P 500

[brobro777]

After decades of pessimism and issues like and Zaitech losses (e.g. https://www.nytimes.com/2011/11/10/business/global/corporate-japan-rocked-by-scandal-at-olympus.html), Japanese corporations appear to be becoming more shareholder friendly (e.g. recently at NTDOY) and Buffett bought more (https://www.wsj.com/articles/japanese-stocks-hit-a-33-year-high-thanks-in-part-to-warren-buffett-7327a1ed). 

 

Is it possible that Nikkei will outperform SPX for the next 5, 10 years? What do you guys think?

[Parsad]

4 hours ago, brobro777 said:

After decades of pessimism and issues like and Zaitech losses (e.g. https://www.nytimes.com/2011/11/10/business/global/corporate-japan-rocked-by-scandal-at-olympus.html), Japanese corporations appear to be becoming more shareholder friendly (e.g. recently at NTDOY) and Buffett bought more (https://www.wsj.com/articles/japanese-stocks-hit-a-33-year-high-thanks-in-part-to-warren-buffett-7327a1ed). 

 

Is it possible that Nikkei will outperform SPX for the next 5, 10 years? What do you guys think?

 

Possibly.  But are you buying the S&P500 or individual stocks?  If you are buying individual stocks, it doesn't matter what the S&P500 or Nikkei 225 do.  Cheers!

[Paarslaars]

Could be a good time to go looking for japanese net nets again...

[brobro777]

6 hours ago, Parsad said:

 

Possibly.  But are you buying the S&P500 or individual stocks?  If you are buying individual stocks, it doesn't matter what the S&P500 or Nikkei 225 do.  Cheers!

 

I'm no good at picking stocks so I stick to the index and SPX has been good for years but I'm wondering if it will continue to be so good going forward

 

You're right, good stock pickers will do fine regardless of what the indexes do

 

[brobro777]

50 minutes ago, Paarslaars said:

Could be a good time to go looking for japanese net nets again...

 

Yea you could be right. And not just valuation, some of Japanese companies have pretty good businesses. I remember Olympus in 2011 when they reported the Zaitech losses and people puked out their shares down to Yen100. At the time some were saying that it was cheap (http://nihoncassandra.blogspot.com/2011/11/monkey-on-your-back.html) because despite these losses Olympus has great endoscope business (https://www.lifesciencemarketresearch.com/market-reports/global-gi-endoscopy-devices-market). Olympus is Yen2200 now and of course I didn't buy it in 2011. 

 

I was figuring if these guys can just become more shareholder friendly...

 

[Spooky]

JPM had an interesting Eye on the Market talking about Japanese / US markets: https://am.jpmorgan.com/ca/en/asset-management/institutional/insights/market-insights/eye-on-the-market/too-long-at-the-fair/

[brobro777]

12 minutes ago, Spooky said:

JPM had an interesting Eye on the Market talking about Japanese / US markets: https://am.jpmorgan.com/ca/en/asset-management/institutional/insights/market-insights/eye-on-the-market/too-long-at-the-fair/

 

I think JPM makes a good point regarding increased foreign activism in Japan. Unlike the past, it seems like foreign activists are having more success (https://www.ft.com/content/fc3064ce-a1d3-4f92-91af-ca288f6a4401). The valuation and good businesses were always there in Japan and if that can be unlocked...

 

Buffett bought companies like Mitsubishi and Sumitomo, which are companies with diversified lines of businesses (as well as investments in other Japanese companies), almost as if he's betting more on Japan as a whole. So I was figuring maybe I should keep it simple and increase exposure to the Nikkei 

 

[thowed]

I think where the activism is succeeding is generally where the activists respect the Japanese culture and engage constructively & respectfully.

 

Ideally buy some of the company, turn up to meetings, speak Japanese (or bring a Japanese speaker) and show interest.  Then you can suggest changes.  And if that doesn't work, then you can get a bit tougher.

 

Anyway, there has certainly been more success recently.

 

Separately, there do seem to be a load of super-cheap, decent quality cos in the Micro, Deep Value space, though no guarantee that they'll re-rate.

 

 

[Gamecock-YT]

Depends what the Japanese do about their interest rates. Lots of 2nd and 3rd level effects if they start hiking from japanese repatriating their money into yen, managing their higher interest payments, and their horrible demographics. Could see private equity having a field day if they keep yield curve control in place.