Bill Baruch, president and founder of Blue Line Futures, reviews and previews the euro, Japanese yen...
Also from the Far East
12/15/2006 12:00 am EST
ETF expert Doug Fabian also looks eastward, to the potential of the Japanese stock market. Here he recommends that his subscribers invest in an exchange-traded fund to take advantage of the coming uptrend in Japan's markets.
"Over the past few months, in both the Weekly Hotline and in the pages of the newsletter, I've mentioned what a fan I am of the Asian markets in general, and in particular the Japan market. And although I always liked the fundamental and macro picture in Japan, I didn't feel the time was right to commit any of our dollars to Japanese equities. Well, today all of that has changed.
"Effective immediately, I am recommending you BUY the iShares MSCI Japan Index (EWJ AMEX) with 25% of your Successful Investing dollars. If you do not have access to ETFs, or if you are following our allocations in a 401k-type plan or a VA, you can allocate to any of our alternative Japan funds. If you still don't have access to any Japan mutual funds, a good alternative is to allocate to an international fund with heavy Asian exposure. If, however, that fund does not explicitly have a large Asia allocation, I don't recommend you go there.
"If you do choose to invest in mutual funds rather than my preferred choice, EWJ, remember that you will be subjecting yourself to both a higher expense ratio and some rather hefty redemption fees. So, if you are able, I strongly suggest using EWJ.
"Why Japan now? Well, one reason is EWJ just broke above its 200-day moving average and is now starting a new uptrend. It's always good to take positions in sector funds with good fundamentals right as they are breaking through long-term trends. Timing this purchase right gives us the best chance to capitalize on an emerging uptrend in Japan, and it limits our risk of chasing an overbought fund.
"We are going to have more on the fundamental reasons why Japan is the right move to help us achieve our performance goals in the upcoming issue of the newsletter, but suffice it to say that a falling U.S. dollar; global expansion in the China, of which Japan has a trading surplus; booming automaker's Toyota and Honda, and a whole lot of electronics firms posting outstanding sales figures are all reasons why this sector is ready to make its mark on Wall Street.
"I think we need to be along for this Samurai bull run in Japan, and that's why I want you to commit a quarter of your overall Successful Investing dollars to the land of the rising sun."
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