Japan Earthquake Opportunities

on Friday, 25 March 2011. Posted in ,
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Situation Temporary Dip – Fear has been overplayed.

Japan earthquake

Wealth has been destroyed and lives lost.  Many Japanese companies will suffer significant losses in lost production.  Earthquakes (particularly this one) are terrible, but the rebuilding will create demand and activate savings, of which, Japan has truckloads.  Also, lost in the news rush was another great
set of economic figures from the US – unemployment continues trend down and the Federal Reserve released a note yesterday (Tuesday March 15) with more optimistic wording on the economy.  Globally the slow recovery remains on track.

Buy

1.     Most Global IndicesEarthquake

US, Asia in particular, but not Japan with a lesser focus on Europe, with an exception of Germany.  Germany and Japan compete in the high technology mechanical industry and will benefit from the al markets are down significantly.

Access – Asia – EPP, Singapore – EWS, US Total Market – TWM, Small Caps – IWM or Germany – EWG.

Risk: Low

2.     US value stocks with cash – Dividend increase

Example: HP is selling for 9 times earnings (versus 12 for IBM) and with strong profits and large cash pile and growing revenues.

Access: HPE

Risk: Medium

3.     Japanese Glass Companies –

Glass is broken in all destroyed buildings, but also in those that just received a significant jolt, such as throughout Tokyo

Access: 5201.JP Asahi Glass

Risk: High

4.     Middle East Recovery

Middle East has been sold heavily this year – down 15-30% depending on the market due to ountries in the Middle East won’t have problems.  Dubai and Saudi Arabia in my, perhaps bold, opinion, thinks won’t have problems, but will also benefit from higher oil prices.  A recovery of 20-30% is quite possible.

Access: MES

Risk: High

Avoid

  •   Uranium producers or nuclear power technology providers.
  •   Japanese Indices.

Final Thought:

Warran Buffett’s advice “be fearful when others are greedy and greedy when others are fearful

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