When to Buy Japan
The title here is a bit flashy, for most. The disaster is just unfolding, what do you mean to buy? Yes, we think Japan is a great buy. It is not a question of "whether to buy" but "when to buy". A financial come-back after years of sluggish performance but a sudden hit by a terrible earth quake would not destroy its up rising trajectory. Also, the government shows strong financial controllability dealing with speculation. Once technical issues (such as nuke leak) are resolved, it would be a perfect rebound: strong credit injection, rebuild, inventory restock, etc. So it is a great buy and the question is only "when"?
A excerpt from Fisher's Classical "Common Stock and Uncommon Profits" can not be more convincing. He illustrated a question of "when to buy":
From the standpoint of the investor there are two aspects of all this that have particular significance. One of these is the impossibility of depending on any sure time table in the development cycle of a new product. The other is that even for the most brilliantly-managed enterprises, a percentage of failures is part of the cost of doing business.
Both of these situations would drive stock price to a sensational buy. So he continues:
Once the extra sales effort has produced enough volume to make the first production scale plant pay, normal sales effort is frequently enough to continue the upward movement of the sales curve for many years. Since the same techniques are used, the placing in operation of a second, third, fourth, and fifth plant can nearly always be done without delays and special expenses that occurred during the prolonged shake-down period of the first plant. By the time plant Number Five is running at capacity, the company has grown so big and prosperous that the whole cycle can be repeated on another brand new product without the same drain on earnings percentage-wise or the same downward effect on the price of the company's shares. The investor has acquired at the right time an investment which can grow for him for many years.
In other words, the best buy time is when the two situations struck and stocks become insanely cheap. Stock prices' return is just a matter of time. We think the best buy time is just right in front of us.
A excerpt from Fisher's Classical "Common Stock and Uncommon Profits" can not be more convincing. He illustrated a question of "when to buy":
From the standpoint of the investor there are two aspects of all this that have particular significance. One of these is the impossibility of depending on any sure time table in the development cycle of a new product. The other is that even for the most brilliantly-managed enterprises, a percentage of failures is part of the cost of doing business.
Both of these situations would drive stock price to a sensational buy. So he continues:
Once the extra sales effort has produced enough volume to make the first production scale plant pay, normal sales effort is frequently enough to continue the upward movement of the sales curve for many years. Since the same techniques are used, the placing in operation of a second, third, fourth, and fifth plant can nearly always be done without delays and special expenses that occurred during the prolonged shake-down period of the first plant. By the time plant Number Five is running at capacity, the company has grown so big and prosperous that the whole cycle can be repeated on another brand new product without the same drain on earnings percentage-wise or the same downward effect on the price of the company's shares. The investor has acquired at the right time an investment which can grow for him for many years.
In other words, the best buy time is when the two situations struck and stocks become insanely cheap. Stock prices' return is just a matter of time. We think the best buy time is just right in front of us.
posted by Intl.investment.services at
5:23 PM
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