This week, I’m channeling the chart-topper from the 1980s British pop band, The Vapors, because…
“I Think I’m Turning Japanese, I Really Think So”
I know what you’re thinking right now. How in the world could I suggest buying Japanese stocks? After all, pundits have been predicting a rebound – incorrectly – for years.
But it’s simple, really. Japanese stocks might just be too darn cheap to pass up.
It’s been 61 years since Japanese stocks traded so cheaply in comparison to U.S. stocks. That’s based on the ST Ratio, which hit a high of 1.73 in November, according to Bloomberg data. (The ratio is simply the price of the S&P 500 Index by the price of the Topix Index.)
Take a look:
[ad#Google Adsense 336×280-IA]Still not convinced?
Well, consider this: Warren Buffett’s interested in buying Japanese stocks.
He visited the country in search of opportunities for the first time ever last month.
As Buffett said to reporters, “I like low prices, and low prices create investment value,” and “there are lots of opportunities in Japan.”
Go Small or Go Home!
Now, if you have the brass pair it takes to step up and buy Japanese stocks – or just blind faith in the Oracle of Omaha – let me make a helpful suggestion. Go small. As in small caps.
Why? Because Japanese small caps are cheaper than large caps. Plus, they perform better coming out of economic slowdowns.
Bottom line: Bargains like this don’t last forever. With limited downside, and triple-digit upside potential, it might finally be time to go “all in” on Japanese stocks.
Ahead of the tape,
Louis Basenese
Note from Daily Trade Alert: If you’re looking for a simple was to invest in Japanese small caps, consider shares of WisdomTree Japan SmallCap Dividend Fund (NYSE: DFJ). For more information, see:
This is One of the Cheapest Stocks on the Planet — by Dr. Steve Sjuggerud
13 Reasons to Invest in Japan — by Carl Delfeld
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Source: Wall Street Daily