Marc Faber’s Comments Could Spark Bigger Move in Japanese ETF

Marc Faber, who predicted the 1987 stock market crash, stated today that he thinks the Japanese market is ready to be bought again. This confirms one of T3 Live’s 2011 Predictions that “Japan could be a hot place to be in 2011, which you can play with the ETF EWJ.” Japan has an opportunity to outperform many other countries this year and could continue this trend for the next decade.

Investor’s Business Daily also highlighted Scott Redler’s bullish sentiment on Japan in an article a few weeks ago, “IShares MSCI Japan Index can yield a 20% or more return (in 2011). Right now it is trading at a price-to-earnings (PE) ratio of 20. If the value of the yen falls versus the dollar and the euro, the better off they are. Profits of the export driven economy will rise. Their trading with China is increasing and they are starting to get paid more and more in yen, which is a large benefit to the exporting country. They also have been ramping up trade deals with India. Their debt is somewhat isolated as it is primarily held by Japanese citizens similar to Italy, but more so.

Prime Minister Naoto Kan’s popularity has been in decline since the finance minister took over but that is traditional in Japan — a quickly falling popularity after being elected.

I happen to really like him and but if anyone can steer the country to defeat inflation he can.

If they can break the 20-year cycle and reclaim their manufacturing prowess, you could see a real move.

They practically invented such management techniques as TQM (Total Quality Management), 6 Sigma (pioneered by Motorola (MOT) as they get past this year, which was plagued by auto recalls.

But deflation, the yen and the investment climate are maintained as the biggest headwinds. (They’re very comfortable with cash on their balance sheets and not willing to borrow at ridiculously low rates for investment.) Financials are starting to act well after October’s sell off on capital requirements out of Basel but have been rising since the beginning of November.

Technically we have a long 15-year base that has consolidated long enough that could yield a nice break out to the upside now that some of the fundamental and macro problems have been sorted out.”

The EWJ is now up nearly 5.5% for the year, but now that Marc Faber has predicted it to be an outperformer, it could see much higher prices.

By: Scott Redler and Mickey Goetz

Disclosures: Scott Redler is long NFLX, SPY, JSDU, AAPL, MGM, GLD. Mickey Goetz is long NFLX.

About Scott Redler 367 Articles

Scott Redler is the Chief Strategic Officer of T3 Live. He develops all trading strategies for the service and acts as the face of T3 Live. Mr. Redler focuses on thorough preparation and discipline as a trader.

Mr. Redler has been trading equities for more than 10 years and has more recently received widespread recognition from the financial community for his insightful, pragmatic approach. He began his career as a broker and venture capitalist where he was able to facilitate relationships that led him into trading. Beginning his trading career at Broadway Trading in 1999, Mr. Redler moved on with Marc Sperling to Sperling Enterprises, LLC after establishing himself as one of the best young traders in the firm. As a manager at Sperling Enterprises, continued to trade actively while working closely with all traders in the firm to dramatically increase performance.

Mr. Redler has participated in more than 30 triathlons and one IronMan, exhibiting a work ethic that also defines his trading. His vast knowledge and meticulous attention to detail has led to regular appearances on CNBC, Fox Business, Bloomberg, and he is a regular contributor to Minyanville and Forbes’ Intelligent Investing blog. He has been quoted in the Wall Street Journal and Investor's Business Daily, among other publications.

Scott received a B.B.A. in Marketing/Finance from the State University of New York at Albany, graduating Magna Cum Laude from Albany's School of Business.

Visit: T3Live

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