Wednesday, April 12, 2023

Stock Market Snapshot (plus inflation, earnings prospects & fed funds futures)

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Attention Non-Client subscribers: Nothing in this video should be construed as investment advice. The examples expressed relate to portfolio management we perform on behalf of our clients, and, again, under no circumstances are they to be considered recommendations to the viewer.


  1. Thanks Marty!
    I love our Core Portfolio! They are in great shape (very diversify)! I wish I can learn, understand, and practice diversification at a very young age. (I guess you just learn and move on)
    I want to ask you about Warren Buffett. Buffett is in Japan this week for the first time since 12 years ago. He has recently invested heavily in these five (5) Japanese companies:
    1. Mitsubishi Corporation
    2. Mitsui & Co.
    3. Itochu Corp.
    4. Marubeni
    5. Sumitomo

    For many decades, US market and equities give great returns. Now other markets, like the emerging markets, are more attractive than the US market.
    What is Buffett's logic in the Japanese market? Is he seeing something that Average Joe is not seeing? Japan is a mature market with a population that is aging rapidly. Is there money to be made?
    Thanks in advance.

    1. Hey thanks Sam!

      With regard to Buffett, we should always think of him as the ultimate value investor... So, clearly, he sees value in Japan... So do we... Our Asia-Pac ETF (VPL) is over half Japan.

      For starters, Japan equities trade at 15.7 times earnings, US equities trade at 19.9 times... Japan equities' dividend yield is 2.41%, US's is 1.67%... The BOJ is ultimately going to have to relax or release their stranglehold on yields, while that could be dicey for markets initially, when it happens you'll see quite the repatriation of Japanese foreign investment (capital coming back to the country), looking for a home within Japan's economy... The combination of a higher yen, and higher interest rates, will likely provide a notable tailwind for Japanese assets across the board (banks of course [higher net interest margins (finally)] would be a direct beneficiary).

      From a simple reversion to the mean standpoint, note that the last bull market (the longest in history [we have it ending Jan 2022, i.e., we don't count the covid blip]) saw US stocks up 600%, Japanese equities rose 179%... I.e., there's massive catch up to be had... Also, the last bull market was characterized by a rising dollar trend (negative for foreign equities), we highly expect the next to be characterized by the opposite (a weaker dollar is a major plus for foreign equities)... The previous (relatively short) bull market, by the way, saw Japanese stocks up 127%, while US stocks rose just 86% (the dollar trended weaker throughout).