PII-33 -- Capital Guaranteed Investments

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P E R S O N A L I N T E R N A T I O N A L I N V E S T O R
Personal Finance Intelligence for the Tokyo Community
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Personal International Investor
Vol. 33
November 4, 2005 Tokyo

For the full HTML version, go to:
http://japaninc.typepad.com/personal_intl_investor/2005/11/vol33_.html

CONTENTS

+ Feature
+ From the Editor
+ Forex Weekly
+ Yen Watch
+ Events
+ Job Watch

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FEATURER

Capital Guaranteed Investments
(By Chris Cleary, Banner Japan K.K. | November 4, 2005)

Would you like a capital guarantee on your investment? Most
people would, if they could have it. Cash in the bank has one,
but then you are stuck with the poor performance of cash (good
as a shelter in times of trouble, but longer term the worst
performing asset class of the lot). Bonds have a guarantee too,
but like cash that is only nominal, and in times of inflation bonds
truly are certificates of confiscation. Property tends to retain value
long-term and respond well to inflation, but property prices move
in cycles and a lot of places have been looking toppy for some
time (Japan excepted). And stocks are the mad March hare of
investments, with tremendous downside as well as upside
volatility - no chance of a guarantee on a stock portfolio.

Click here to read more...
http://japaninc.typepad.com/pii_full_article/2005/11/vol33_.html

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FROM THE EDITOR

Looking for a House - Making an Offer (Part Three)

Once you find a property you like, the act of buying is relatively
straight forward, because your Realtor will pretty much be taking
care of all the paperwork. Realtor fees are a standard 3% and
you won't achieve anything by trying to do the purchasing
process yourself. The very act of buying a property in Japan
is nevertheless nerve-wracking. Most likely what you will be
spending in Japan is still substantial compared to overseas
real estate. In essence, a million dollars for a shoe-box・

The normal procedure in going into a purchase is that you've already
talked with several banks, and have a pretty good idea that you will
in fact be eligible for a loan. If you're dealing with Shinsei Bank,
right now they don't do preapprovals, so you might want to get
a preapproval from another bank as a back-up, just in case
something doesn't go right or the approvals process takes too long.

Naturally the realtor want you to buy quickly, and if you show even
the slightest interest, they'll be all over you with paperwork, offer
acceptances, and other components of the sale. So tell them
firmly from the start not to push you until you're ready. Take
your time and see all the properties you need to see, before
falling in love with the spot that will be yours for another decade
or more.

Once you do decide to buy, you will soon be asked to put down
a deposit. My understanding is that while in principle you're
supposed to put down 10%, in fact if the property value is high
(JPY100m or more), then simply a meaningful amount of cash
to show commitment is OK. The act of making the deposit does
commit you to buy, else you forfeit the deposit, but you can load
up the purchase contract with conditions such as successfully
getting a bank loan from a certain bank (i.e., to get lower interest
rate), getting a clean bill of health on the property from the
assessor in terms of your ability to build, access it, there being
no liens or claims, etc. If any of these conditions falls through,
then you get your money back.

However, if the seller wants to back out of the sale because they
have another buyer, then they have to pay you 100% ("nibai-gaeshi")
additional "interest" for having inconvenienced you. This is a good
feature about Japanese house buying and reduces the likelihood
of being "Gazumped" such as happens in in heated markets
overseas.

In terms of paperwork, making a deposit requires showing up at the
Realtor's office with the deposit and a variety of forms (hanko,
inkan shomeisho, proof of residency or ID, etc.) which the Realtor
will give you a list of. You also need the money, which is typically
cash, although if you asked for permission to do so, I believe you
could also take a bank check. It can feel strange walking around with
some millions of yen in cash in your pocket!

One thing you never hear about with Japanese real estate is
negotiating the price. For prepackaged land/house deals with large
companies, it's almost impossible to negotiate, but if you're buying
the property off another individual or one of the many buy-and-flip
real estate "development" companies, then it is possible. If the
amount is large enough, it may also be possible to negotiate the
Realtor's commission down as well ・providing of course that he/she
is still getting their 3% from the seller, which doesn't always happen
these days.

The land market inside Tokyo is heating up, and competition for
vacant land is fierce. Developers employ middlemen ("Jiageya")
to find properties for them, they then buy them, rip down the old
dwelling, clean up the property, and put it on the market. Having to
pay cash for the land, the developers are usually on the hook for 90%
of the property value to Orix or some other financing firm, and thus
the interest clock is ticking. Where possible, these guys would
rather get in and out fast, and if they can make 5-6% on
a development, they're happy.

Of course the original price asking price is higher, 10% being
a typical target profit margin, so what you can do is ask your
Realtor to calculate the likely margin the developer is making,
and cut it in half, making an offer below that 50% number, then
"compromising" your way back up to the 50% over a couple of
days of back-and-forth through the Realtor. Naturally this means
that you need a cooperative Realtor, so whether you hit on the
developer for the discount (easier) or the Realtor, is up to you.

Terrie Lloyd
...Investor in Training/

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FOREX WEEKLY

Team Tokyo Forex Weekly
October 25- November 2, 2005

Ode to the U.S Dollar. So that's how it's done!

Is it a miracle that the U.S have miraculously avoided great losses
through sheer strength of might?

Here is a more Democratic view and the other side of the coin in
our second in the series of 'Ode to the U.S Dollar'.

Jim Rogers, acclaimed author of 'Investment Biker' and 'Hot
Commodities' spoke to Julie Sinha and says the best markets
are now in commodities.

Jim says that commodities get no respect. Stocks and bonds are
losing steam and are moving through a natural cycle. Products
such as Gold, sugar, Coffee and Oil are all hot investments right
now but there is virtually no interest in trading commodities.

Europe which has the largest combined economy as a whole has
very few commodity trading platforms. Stocks and Bonds seem
to have stalled and commodites have started to boom.

The U.S government claim that prices for daily consumables are
not going up. But the Indexs do not lie and it is obvious that prices
are going up. Rogers claims the U.S government is manipulating
the numbers in their own statements.

Rogers also claims that the U.S government and the BLS (Bereau
of labour Statistics) hedonically adjusts the numbers. Basically
they are trying to show us a good time.

He claims that the US government are attempting to devalue
the dollar becase of it's international debt. The U.S is the largest
debtor nation in the world. Rogers claims that stocks and
commodoities average an 18 year cycle and that the current
cycle will last for up to 15 years in the future.

Jim's advice in the markets.

The US dollar is in serious trouble because the US currently have
debt of up to 8 trillion dollars that averages at an increase of
1 trillion dollars every 20 months. He also claims that there is
a lack of education avaliable for 'would be' traders.

The Chinese have allowed the Yuan make a breach of its current
position of 3/10 of a percent in favor of Bush's planned visit to
China and is poised to be the next best currency the world has
to offer.

The Federal Reserve will excellerate its printing of money which
will drop the dollar value. Fixed income traders should get out
of long term bonds. He claims Greenspan is very rarely right
and the bond market topped in 2003 and will be a bad place to
settle for the next 10-20 years.

We think that if you are going to do something then you need to
talk to one of our traders so you know what is going on.

On October 27 the USD/JPY pair rose to a new 2 year high of
116.23 briefly but was limited below previously mentioned clustered
resistance of 116.32/34. A much worse than expected retail sales
figure out of Japan of 0.1% didn't fuel any further rallying in
the USD/JPY. Instead, USD/JPY fell over 100 points from
116.23 to as low as 115.09 on profit taking. Such development
suggests a near term top has possibly been formed and reversal
could be around the corner. Much focus will be on worker's
household spending. National consumer prices and industrial
production data will be released later in the day.

Germany's consumer confidence index rose to 3.4 in October,
better than the expected 3.1. A retreat of energy prices and
resolutions between political parties for forming a coalition
government being cited as the main cause for such increase
and this can be viewed as additional sign of steady growth in
Germany.

We are expecting a second wave of fundamental effects on
the forex market this week. The most important events are the
expecting FOMC meeting when US Interest rates change to 4.00%
and US Non-farm payrolls data on Friday.

You might be safer opening short positions during the week.

On October 28 the USD/JPY pair stood at 115.67 with a trading
range of 114.60 - 116.75 and an upward trend expected. Also
expect new record levels above 116.20 during the coming week.
Reported by Forex TV.com

Team Tokyo Forex Final Round up.
On Monday 31 the pair closed at 115.71 making use of short
positioning saw good profit taking.

As of Wednesday November 2 the USD/JPY did indeed reach
116.81 as anticipated breaking the above records.

View live trading rates at our new page:
http://www.tokyo-forex-japan.com/liverates.html
There is a small delay in time and are considered to be guides only.

View a chart of weekly activity here. USD/JPY

Editor : Jason Bainbridge
callme@tokyo-forex-japan.com

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EVENTS

No events this week.

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JOB WATCH

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- AR Director (Negotiable)
- Facilities Manager (JPY 10-12M)
- Investment Accounting Manager (JPY 14-15M)
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- Operations Project Management (JPY 7-9M)

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SUBSCRIBERS: 631 as of November 4, 2005

Edited by Burritt Sabin (editors2@japaninc.com)

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