Japan looked pretty cheap...

 ... but even know, after a 50%+ run up in the Nikkei, I find superbly managed companies reasonably priced and averagely managed companies that are dirt cheap.

Japan begins to look pretty cheap

By Edward Chancellor

Published: December 5 2010 09:53 | Last updated: December 5 2010 09:53

 (...)Pundits now suggest that Japan’s decline from economic pre-eminence will mirror that of Argentina over the 20th century. Such gloomy prognostications should whet the appetite of all contrarians (...).

(...)“Nothing could be more useful [for an investor] (...) to be diffident when others exalt, and with a secret joy buy when others think it in their interest to sell.” (...)

(...)The Bank of Japan has been timid in comparison to the extravagant quantitative easing operations of the Federal Reserve and Bank of England (...).  

(...)The Bank of Japan is coming under increased political pressure either to end deflation or face the loss of its independence.(...)

(...)There is a history of Japanese stocks responding positively to an end to deflation. In late 1931(...), (...)Inflation quickly returned and the stock market nearly doubled over the following year(...).

(...)The sceptics will prefer to avoid Japan until it is much cheaper than other markets. It is true that on a cyclically adjusted price-earnings ratio, Japan is about as expensive as the US. But this overstates things (...),  (...)large losses that Japanese banks experienced during the past decade on property loans and cross-shareholdings. Exclude these exceptionals and Japan begins to look pretty cheap (...).

(...)Andrew Smithers notes that corporate investment has been declining in Japan since the onset of the credit crunch. Lower depreciation in future will boost profit margins. (...) 

(...)Many stocks in Japan meet Ben Graham’s criteria for cheapness, sustained profitability and robust balance sheets. The same cannot be said of the US.(...)


(...) Demographic doom-mongers also overlook the fact that investment returns are not derived from economic growth. In fact, research shows there is a mildly negative correlation between changes in GDP and stock market performance (...).