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Politics : Ask Michael Burke
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To: Skeeter Bug who wrote (74045)1/19/2000 4:14:00 PM
From: Freedom Fighter  Read Replies (1) of 132070
 
Skeeter,

I know less than nothing about the specific values in Japan, but I do have a few insights.

Both interest rates and return on equity are very low in Japan. There's also a lot of valuable cross equity holdings that don't make their way to the income statement. I suspect that under conditions like that, high PEs might be less scary than they look. It's sort of like paying up for the depressed earnings of a company with extra hidden value.

I saw some replacement cost data that suggests that Japan is less overvalued than most countries based on Tobin's Q. Japan just needs a serious recovery and more of a focus on ROE and the values are not too crazy when viewed from a longer-term perspective.

Wayne

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