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Market Oracle FREE Newsletter

Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Buying the World's Cheapest Stock Market

Stock-Markets / Japanese Stock Market Mar 03, 2010 - 09:05 AM GMT

By: DailyWealth


Best Financial Markets Analysis ArticleDr. Steve Sjuggerud writes: There is no greater investment value in the world of stocks today... and possibly in all of history... than small stocks in Country X.

Astoundingly, Country X has 200 companies trading on its stock exchange for less than the cash on the books. Said another way, they're selling for less than FREE.

If you could snap your fingers and buy all the shares of one of those companies, you'd have more cash than you spent... and you'd get an entire business for free.

Take a look at just how cheap smaller companies in Country X are compared to some "popular" markets:


Dividend Yield



China (Shanghai) 1.36% 3.20 2.23
U.S. (Nasdaq) 0.86% 2.64 1.85
India (BSE30) 1.07% 3.31 2.15
Country X (smaller companies) 2.36% 0.83 0.40

The popular markets have an average price-to-sales ratio of about 2. Meanwhile, small stocks in Country X have a price-to-sales ratio of 0.4. Small stocks in Country X would have to rise FIVEFOLD to be on par with these other markets.

The average price-to-book ratio of the other countries above is about 3. Small stocks in Country X would have to rise nearly FOURFOLD to be in line with these other countries based on this measure.

You might think, for stocks to be this cheap, something has to be terribly wrong in Country X... But I assure you it's quite normal.

It's a nice place to visit. I was there a few years ago and was amazed. The cab drivers wear dress suits and gloves and are incredibly polite... Heck, even the street-sweepers dress formally.

Country X is not Pakistan or Venezuela... or some other dangerous place to put your money. But its shares – unbelievably – are a better value than stocks in Pakistan and Venezuela.

Country X is actually less corrupt than the U.S., according to Transparency International's 2009 Corruption Perception Index. Citizens obey the laws, and your money is safe.

Brazil and Russia might be hip with investors... Stock markets in those countries were up over 100% last year. Country X's main market was up only 2% in 2009. You haven't missed a thing in Country X.

Country X is not an "emerging" market at all. It is a developed country with some of the highest incomes in the world... Income per person is nearly US$40,000.

Stocks are cheap in Country X simply because investors have given up hope. You'd give up, too... Stocks in Country X hit 25-year lows last year!

Here's an idea of how much Americans have given up hope on Country X's stocks: In 2006, a Rydex fund of Country X stocks had about $200 million invested. Today, it has less than $5 million invested. In 2006, the iShares Country X fund had $15 billion in assets. Today, it has $5 billion. In short, nobody cares.

In my True Wealth investment advisory, I look for three things in an investment: cheap, hated (or ignored), and an uptrend. That's why I recommended buying a fund of small Country X stocks in the latest issue, which went to print last week.

Small stocks in Country X basically set records for the first two categories. For cheap, we're at valuations "never seen in the history of investing." And for ignored, the market is near 25-year lows. The uptrend is there, too... Shares of my Country X recommendation clearly bottomed in October 2008 and again in March 2009. As I write, they're just a few cents away from new highs for this year.

To end the suspense, Country X is Japan.

For me, buying small Japanese companies today is like buying gold in 2002. If you missed gold then, don't miss this now...

In 2002, investors were completely apathetic about gold. I couldn't get people interested in the least. I don't think anybody took me up on my recommendation. I actually lost some subscribers for recommending gold back then. They wanted the next hot dot-com... and I wasn't going to give it to 'em. But gold soared, and dot-coms did nothing.

Don't make that mistake with small Japanese stocks today. They're cheap. They're ignored. And they're in an uptrend. Buy shares of small companies in Japan today.

Good investing,


The DailyWealth Investment Philosophy: In a nutshell, my investment philosophy is this: Buy things of extraordinary value at a time when nobody else wants them. Then sell when people are willing to pay any price. You see, at DailyWealth, we believe most investors take way too much risk. Our mission is to show you how to avoid risky investments, and how to avoid what the average investor is doing. I believe that you can make a lot of money – and do it safely – by simply doing the opposite of what is most popular.

Customer Service: 1-888-261-2693 – Copyright 2010 Stansberry & Associates Investment Research. All Rights Reserved. Protected by copyright laws of the United States and international treaties. This e-letter may only be used pursuant to the subscription agreement and any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), in whole or in part, is strictly prohibited without the express written permission of Stansberry & Associates Investment Research, LLC. 1217 Saint Paul Street, Baltimore MD 21202

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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