Thanks for the great post. I've got a couple of questions:
1. From 1979 through 1986, the Yen-Dollar exchange rate ranged from 190 to 280. I understand the general idea about the purchasing power of Japanese citizens, and potential inflation of foreign goods, but why is it such a big deal that the Yen just broke up through 140 when it has traded much higher (or should I say lower) for extended periods in the past?
2. You bring up interesting points about the 14,000 level on the Nikkei. In 1989, the Nikkei was 39,000 (I'm going from memory here, so forgive my approximations). In the next few years, the Japanese economy went to hell and the Nikkei plunged more than 60% to just above 14,000. (Now there's a bear market!!) Then, during the next year or so, there was a nice dead cat bounce, but the market went back to retest the 14,000 level. After a successful retest, the Nikkei moved back up to about 20,000 over the next couple of years, followed by the recent decline to just above 14,000. Again, the 14,000 level held.
This leads me to my second question: The Japanese market has experienced a ten-year bear market with a triple test of the crucial 14,000 level over an extended period. Is it possible that now is the ideal time to buy the Nikkei?
Thanks for your informative posts.
I2 |
