Japan Earthquake

Last check on the Greed Index showed 52.48. It is fast dropping while S&P violatility goes steadily up. The market got its real bloodbath today. Nikkei goes down more than 1000 point in just one day and this is on top of the 600 over point loss yesterday.

Compared to the MENA crisis, this is more real and more critical. Japan is the 4th largest economy in the world. Any impact to Japanese economy will definitely affect the world economic recovery. A quick look at the decling oil price will tell you the importance of Japan economy to the world economy and in turn the global demand of oil. What's good of replenishing the loss of oil supply due to Libyan's crisis if there is no demand at all. Interestingly, US Treasuries shot up to the sky right after this crisis. This is what they called flight to safety. Is this true? Japan is the largest holder of US Treasuries. Like China, they have been purchasing US Treasuries to keep the Yen low. With this crisis on hand, I really doubt whether they can continue to do so. I suspect they will put these money in good use by rebuilding the infrastructure and confidence of the people. Without demand, is US Treasury still safe? Anyway, that's not the point of discussion today.

We have seen so many crisis since last year. First, we have the European sovereign debt crisis. Then, the North Korean crisis, the China inflation crisis, the MENA crisis, the Japan earthquake and now the Japan Nuclear meltdown. I really do not know how bad can it get from here. If there is too much pessimission, there is fear. Today, we have the first ultimate fear in the world stock market after 2008 and it may even get worse these few days. However, I cannot really see anything else that can make it any worse. Is it time to get back into the market? Probably. But, we also do not want to catch a falling knife. Prices of some of the growth stock are looking very attractive again. If we are able to get good dividend return and a good price-to-book value from these stock, why not?

Nevertheless, please remember to practise good risk management in case this crisis can really get worse further. Who knows?


Disclaimer: The content in this blog contains purely my personal opinion and it is in no way a substitute for professional financial advice. You should seek advice from a professional financial advisor with any question regarding your financial matters.