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Comment by wheaties | Hacker News Reader

Time to start buying. Bet Buffet is taking a look at all those wonderful Japanese companies who moats are wide, have good fundamentals, and produce reasonable free-cash flow. Hope his "itchy trigger finger" found a few targets. My IRA could use a boost after the last few years.

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Did you buy two years ago? Because the Nikkei was lower at various points in 2009 than it is now. If not, why is this valuation better?

It's almost certain that Buffet would be actually analyzing these stocks rather than just jumping in because people may be being fearful.

I remember buffet saying in some interview that Japan makes great products and has a great economy but they don't make great companies, from the investor's perspective.

You must think markets are pretty inefficient.

Can you explain why this is time to start buying?

If you can explain why people are selling so much so fast right now, that might help your argument.

Yes and no. What I see is all of Japans equities moving in lock step regardless of where their manufacturing or distribution centers are actually geographically located. Much like Toyota or one of our own blue chips some of these companies are headquartered in Japan but exist all over the world. Those are the companies whose fundamentals do not reflect an equities plunge like we are seeing.

They are inefficient - that's the entire basis of George Soros' investment strategy.

efficient > slightly inefficient > inefficient > pretty inefficient

My comment was not meant to start a conversation about the meaning of efficient markets, but to get wheaties to explain his reasoning.

any recommendations? Toyota?

Toyota's stock is probably undervalued to begin with because of the stupid pedal thing, and this probably makes it extreme. Short-term traders need not apply, though.

Toyota's trading at 21 times earnings on the NYSE... that doesn't seem like a crazy bargain. (Or is there some parallel listing on the Nikkei?)

Toyota is listed on the Nikkei. The thing at the NYSE is called an American Depository Receipt (ADR). Basically, it is a coupon that says "Entitles the bearer to two shares of Toyota common stock in Japan."

In principle, the two do not necessarily have to move in lockstep. However, because of the massive size, prominence, and stability of Toyota, one would ordinarily expect them to correlate extraordinarily heavily as anything else is an exploitable arbitrage opportunity.

Various algorithmic traders play on these dual listings. Put a computer in between (in network terms) and you can trade ahead of the people in either japan or new york.

and of course you can also do regular pairs trading (if they drift farther apart).

While watching CNBC today I saw a story stating Toyota had to close a few factories and had a lot of damaged inventory.

You're going to want to look for a company with the least exposure to Japanese demand. You also want to see which company's plants were most disrupted by the crisis. I had the data before, I no longer look at the car industry in Japan but do some research and you'll know. Not sure if this is the time to buy any Japanese equity right now though, it's a flight away from risk and investors are indiscriminate with their funds.

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