MW-75 -- Investment Cycles ・ Compass Anyone?

J@pan Inc Magazine Presents:
Weekly Financial Commentary from Tokyo

Issue No. 75
Tuesday, May 11, 2004

@@ VIEWPOINT: Investment Cycles ・ Compass Anyone?

[*This week, we proudly introduce our new Money Watch contributor,
veteran Tokyo-based investment analyst John Charles-Decourcy.
We also extend our deepest gratitude to longtime contributor Darrel
Whitten, whose excellent research and analyses have characterized
this weekly bulletin. Whitten's commentaries still appear monthly
in our print publication (, and also at his own Web
site ( Thank you, Darrel.]

======================= =================================
Ad-free, low cost, POP3 mail, straight to your inbox (and on the web

Don't settle for free email accounts anymore...

Get your own cool, personalized email address for life -- cheap and

Click here for more:

========================= IT SUPPORT ================================
Argo 21, specialist in IT system development and IT outsourcing for
over 20 years, provides you with total solutions for your business in

Need to prove security compliance to your HQ? Or planning to consolidate
your network and cut administration costs? See how Argo 21's services
can help:

Put our nationwide support network and extensive application
experience to work for you.
Email:, or call 03-5548-3300.


@@ VIEWPOINT: Investment Cycles ・ Compass Anyone?

I imagine that the conundrum of working out where you are in an economic
cycle (and thus the investment cycle) is very much like navigating from
town to town three- or four-hundred years ago, before there were any
signposts and railway lines to follow. Navigators had to use the
terrain, the sky and historical references to ascertain where they were,
but ultimately the navigators themselves only knew of success upon

So it is with investment: We know where we are, but we must use the
signals and cues from around us to divine the future direction.

With that as the caveat, for this first article I thought we should
look at the Japanese equity market. From my experience, I am convinced
that there is no such thing as a rational market, nor do I believe the
market is efficient. But I am convinced that common patterns do occur
over and over again in many walks of life, not least the markets.
And a clear pattern appears to be developing in the Japanese stock

The fall from the 40,000 yen high on the Nikkei and the years of
stagnation have been well documented for all, but the past four years
have provided many signals of a new direction for the astute observer.
The sell-off to a low of 7,603 yen (19 percent of the high of 1990)
started from a peak of just over 20,000 yen at the beginning of 2000
and reached the low in March/April 2003. Since then there has been a
rapid rise in share prices on large volumes of shares being traded.
These weekly and monthly movements have formed themselves into what
technical analysts call "an inverse head and shoulders."

The inverse head and shoulders broke its neckline at 11,500 yen a few
months ago, and this -- coupled with the increased volume -- is a
very powerful reversal pattern; the technical analysts tell me that
this projects to 16,000 yen on the Nikkei, but as with all markets,
there will be a few bumps in the road, and it may take some time.
The current pullback is very consistent with that view and the chart
is developing symmetry around the low -- another good sign.

Yes, I can hear the cries already: "But the banks still have massive
problems;" or "Credit is still contracting;" or "What about the life

Agreed, these are still significant problems. But in the 90s, the US
equity market signaled the successful resolution of the savings and
loan issues well before the problems had been clearly resolved.

I believe the market is indicating a key turn here: There are
additional signals suggesting that Japan may be entering into a
multi-year growth phase that has the potential to put China's
recent growth to shame in some respects.

We will analyze the indicators from the economic landscape as we
travel the road in Japan and comment on the twists and turns in the
path -- because I am sure of one thing: Wherever Japan's economic
destination lies, it will not be down a straight road.

-- John Charles-Decourcy

Nikkei Net Interactive - We put Japan's business world
on your desktop.
EXCLUSIVE NEWS: Nikkei news with 100 stories daily
& The Nikkei Weekly.
COMPREHENSIVE DATA: Stock quotes, profiles,
financial summaries & news.
LIVE MARKET INFORMATION: Real-time quotes for Nikkei Indexes.
CUSTOMIZED SETTINGS: News filters, portfolios and e-mail alerts.
COST-EFFECTIVE: 6,300 yen per person per six months.
Register for your trial today:

============================= EVENT =================================
Entrepreneur Association of Tokyo -- May Seminar

Russell Willis, President of Ltd., will be presenting,
"eigoTown: Making A Consumer Website Work in Japan." Come out and
learn how he has generated 80,000 members, 200,000 unique visits per
month and much more.

Date: Tuesday, May 11 (TODAY!!)| Language: English Email:

======================= MAY DAY/M'AIDEZ =============================

The MAY issue of JI magazine boasts FREE online access!**

Check it out NOW:

(**For a limited time; thereafter all archived contents will be

>> INVENTOR VENGEANCE: Leo Lewis visits wacky Dr. NaKaMats -- and
shows us the inside story of this year's inventor litigation craze.
Japan's star innovators are suddenly ... making money!

>> BIZARRE BAZAAR: NPR's Lucille Craft shows us how Japan's used-car
auctioneers just might outglamor IT and tech -- and why Yokohama has
become the new home base for selling Japan's junks.

>> PAPER SKY FLIES HIGH: Two American brothers are selling Japan to
the rest of the world.

PLUS: Join us at Anime Fair '04; Find out what McCann Erickson is doing
in Japan; Hop north to Hokkaido's forgotten wealth; Learn how to invest
in the freshly fecund Japan -- and have a whisky on us in Kansai.
Subscribers: 1,720 as of May 11, 2004

Written by John Charles-Decourcy (

Edited by J@pan Inc staff (


To unsubscribe from this newsletter, click here:

To advertise in this newsletter, contact:

Subscribe at:

We welcome your viewpoint:
(NB Please do not reply to this newsletter -- it's outgoing only,
so we won't get it!)


(C) Copyright 2004 Japan Inc Communications KK. All Rights Reserved.