|
|
|
|
|
|
|
|
|
|
|
For the last 12 years we have seen the Japanese stock market slowly sinking from a high of 38,000 to about 8,000, more than a 75% loss and very close to the price of the Dow Jones Industrial Average. Why should we care about their stock market?
Please understand that the stock market price is a reflection of the overall economy of a country. Every major country has a stock market index related to their economic health. Today almost every one of them has been in negative numbers for the past 3 years. If you believe the numbers we are in a worldwide recession and the trend is still down. That means we can see further slowing of the world economic health. So what? Well, it could be the difference in your having a job or not having one.
Japan used to think that an unemployment number of 2% was terrible. It is now running about 5%. So, fewer people are working. Why should you care? Japan is our second largest customer for U.S. produced goods. If less people are working than there are less yen to buy American goods. Japanese businesses won't have as much money to buy new equipment much of which is purchased here. What happens there could be a reflection of what could happen here.
Why has their market dropped so horrendously? The bankers made mortgages and loans to companies. Most bank do. However when a loan went bad (collateralized by stock of the company) they did not charge it against their books. When the stock went down they did not revalue it on their books. In the U.S. the banks are required to 'mark to the market' every reporting period. That means they must say what it is valued at at that time, not when they bought it. Japanese banks (and Argentine banks) are not required to do that so they show on the books a fictitious valuation for loans and stocks many of which are worthless. The investment community knows this so they keep selling Japanese stocks.
Can we do anything about it? Probably not because it is political and there seem to even fewer 'honest politicians' in Japan than we have in Washington. But we can learn a lesson that you must above all be honest with yourself. When you have a stock in your portfolio or 401K that is going down you should sell it so that the loss will not become greater. Most Japanese banks are broke and you don't want to end up that way.
Brokers will tell you you don't have a loss until you sell which is so much hog wash. How much is your portfolio really worth? And in what direction is it headed? Don't let your investments become another Japan.
Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at and discover why he's the man that Wall Street does not want you to know.
Copyright 2005
; 1-888-345-7870
If you are serious about making and keeping money by... Read More
In a previously written article, we expanded the use of... Read More
The Shadow knows. There used to be a radio program... Read More
Picture one of those clubs where only the real heavyweights... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Recently I watched my favorite football team lose a vital... Read More
You read and hear a lot about hedge funds. Unfortunately,... Read More
Wall Street has been preaching the doctrine of Buy and... Read More
Everyone who invests in the stock market wants to be... Read More
Duck! No I don't mean a quack, quack. I meant... Read More
Look back over the years and try to remember how... Read More
During our travel down life's path we come to many... Read More
We keep hearing about this bear market and that the... Read More
"If you don't know where you are going, any road... Read More
How do you invest? What do you really pay? At... Read More
A stock market index is a statistical measure of changes... Read More
'Sector funds are too risky.' 'I doubled my money with... Read More
Wall Street has been preaching for years and years to... Read More
One of the greatest challenges of investing in stocks is... Read More
If it walks like a duck, quacks like a duck... Read More
Fundamental analysis.Fundamentals analysis says the best way to predict the... Read More
One of the most believed bits of conventional wisdom from... Read More
If you were to find that you had some severe... Read More
As an investor you will want to check out any... Read More
Mutual funds and brokers are always preaching not to buy... Read More
If you are fed up with early redemption charges and... Read More
We all know that emotions control every decision that an... Read More
What does it mean to short a stock?This means that... Read More
Every day I see in the financial section of newspapers... Read More
Inverted interest rates? What's that? Who cares? Even if you... Read More
Having lived aboard a sailboat for 2 years I was... Read More
It seems that every day I turn on the TV... Read More
Recently I was invited to appear on a live CNNfn... Read More
According to Investopedia Inc. the penny stock market has seen... Read More
I use the P/E ratio as a secondary indicator for... Read More
Has your broker been calling you recently with the "great... Read More
Right now there doesn't seem to be any "gold fever".... Read More
Just about now everyone is confused as to which way... Read More
The Shadow knows. There used to be a radio program... Read More
"There is nothing more frightful than ignorance in action!" Johann... Read More
Ever have one of those sample boxes of candy? Each... Read More
How do you make money without picking tops and bottoms?I... Read More
Suppose your position has made a big move and you... Read More
If you're like many investors who squander those small dividend... Read More
The stock market often closes a week in the middle... Read More
How often have you come across an advertisement or e-mail... Read More
There can't be many traders who haven't at least considered... Read More
Congress recently passed another new law that is supposed to... Read More
With the stock market stubbornly refusing to settle down and... Read More
For years investors have been taught to look into the... Read More
Stocks & Mutual Fund Stocks & Mutual Fund |