The Nikkei-225 is likely to come under selling pressure at these levels. The country is really faring poorly as a result of a slump in exports, and job cuts. Confidence is at a low level. The defiance comes only from the market, which of course is being fuelled by the cheap bank funding, as you can bet the funds going into the banking sector are not going into loans.
I don't see the Nikkei going above 9600 points unless the Japanese government decides to stimulate the economy with yet more money. Of course there is no limit to the upside in equities in the short term. It all comes down to how much you are prepared to debase your currency.
So I am negative on Japan, but let's wait and see for the market to set the direction. Stimulus will drive the market higher, property taxes will drive it lower.
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Andrew Sheldon
www.sheldonthinks.com
Investment Strategy
If you are investing for the long term, you still need an investment strategy. Dont be fooled by the rhetoric of fund managers. The reason they advise you to 'buy & hold' is because they dont want to compete with you in sell-offs. Markets and industrial sectors are cyclical, so they demand trading to get the best returns. Fund managers actually cant hope to match the performance of small investors (if you are half good) because they have to manage huge amounts of funds and charge you a fee besides.
MY ADVICE is (i) look at a range of market indices and decide upon what level of correction would give you the justification you need to get in & out of the market. It might be a 5-10% retracement or a break of trend. (ii) Diversify if you dont have an intimate knowledge of the company or management. More than 30% in one company is aggressive.
The Nikkei-225 is likely to come under selling pressure at these levels. The country is really faring poorly as a result of a slump in exports, and job cuts. Confidence is at a low level. The defiance comes only from the market, which of course is being fuelled by the cheap bank funding, as you can bet the funds going into the banking sector are not going into loans.
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