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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: Paul Senior who wrote (42448)	4/28/2011 11:44:09 PM
From: Spekulatius	Read Replies (1) \| Respond to of 78596

I feel I have to write a rebuttal to your post, because some of your views are outdated. >> Deming speaking to Japanese leaders and government, whose country was in ruins (1950): What is the purpose of quality? High quality means lower costs (NOT HIGHER), and thus, eventually (with lower production costs), more sales! What is the result of more sales? More profits. AND MORE JOBS. Which is what you (Japanese people circa 1950) need and want, that is -- jobs! What is the purpose of profits? To recycle into more and better products and quality. And thus MORE jobs.<< I guess you have not heard the story about disenfranchised workers even at large companies (new college graduates earn way less than their peers starting 10 years ago). or did you read the story about the nuclear plant maintenance worker making the same salary than workers at a local McDonald. Japanese companies are not as nurturing to their workers any more than you think. --- >> Anyway, my view is there's little reason in general for any discrepancy between asset value and stock price for these Japanese companies to be reduced. Thus, in my view, they are value traps.<< I started to buy stocks in 1982 through my local bank. the guy behind the counter was having trouble finding the order form (you had to fill out a form back then, later you could do it via phone). He said I was the only one for quite some time buying stocks. So I come to believe that it's not necessarily a bad time to buy stocks when nobody else is buying it. I do acknowledge that it could take a long time. Japan had a 20 year bear market - it could become a 25 year bear market , who knows. I also agree that the economy in the USA is better for the foreseeable future but that does not necessarily mean that Japanese stocks are worse when purchased cheap enough. my believe is that it is better buy stocks which have an international business and hence benefit from economic growth worldwide. There are quite a bit of small size and mid size companies around that export their products world wide. -- >> Japan stocks as value traps? I maintain my opinion: the ones that are not multinational like Toyota, Sony, etc -- are value traps. << Have you ever heard about Shimano, Keyence, Kurita Water or Shinetsu before? Those are world wide leaders in their respective business. Sony is a has been. They are not the leader in consumer electronics or else any more. AN one more thing, if you compare US companies with Japanese ones: A Japanese company with flat revenues during the last 5 years in Yen would have shown a 50% increase in revenues in US$. That is s consequence of the "clownbuck" policy of our US leadership. The problem with Japanese companies are real and my guess is that they won't change quickly - but then again valuations are such that they don't have to. it is quite possible to get better dividend yields in Japan than in the US currently. the companies profit as measured in ROA is absymal but is is actually improving. You can look at many Japanese companies website and look at their profitability back 10 years ago, compared to know. back then their profits were very small and their balance sheet were bloated with 10-20% equity only. now the equity is typically ~40% and higher and the profits/share are way higher than 10 years ago, yet stocks trade a t fraction of the prices back then. I also see profits bouncing back fairly quickly after this great recession, much faster than in 2002-2004 timeframe. So I think the Japanese are cutting costs. My believe is that things are moving in the right direction and if it continues, the returns are going to be substantial.