Wednesday, January 30, 2013

While You Were Sleeping: Nikkei Up 2.28% Overnight

Because we're doing this blog thing out in public you are seeing our higher probability and/or lower risk ideas. Not a lot of esoterica in instruments or tactics, no extremely short-term (nano-seconds to minutes) ideas, no strategies based on proprietary information or black-box algos.

I repeat this somewhat disheartening (for those looking for magic) message because I made a declarative statement in a December 17 headline "Japan's Nikkei is In the Early Stages of an Historic Move".
I don't do that very often, preferring to navigate by the aphorism:
It is better to remain silent and be thought a fool, than to open your mouth and remove all doubt*
The "Historic Move" post ended with:
...As another Dow Jones story commented:
...Utilities were a major beneficiary of the LDP victory, with Tokyo Electric Power soaring 32.9%, as the new ruling party is discussing restarting the nation's idle nuclear power plants. Kansai Electric Power also shot up 17.7%.... 
That's not just short covering, that's a whole new mindset.
This move in Japanese equities is the real deal (although "real" returns won't be so hot for yen-denominated purchasers) and offers an opportunity. In the January 11th post "No typo: Analyst sets Nikkei 63 million target" (it's Société Générale's Dylan Grice) the first line was: "Sometimes investing is easy."

What that referred to is the idea expressed by Brutus in Julius Caesar Act 4, scene 3:
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.
It really is that straightforward. The "63 Million..." post ended:
...A couple characteristics of big bull markets:

1) Once the move is underway waiting for a pullback almost guarantees you will be underinvested. Everybody is waiting for a pullback, not everybody has the fearlessness/foolishness to committ.

2) The market will find a way to make your day-to-day prognostications and pronouncements look stupid.

Ease in, even if you have to grit your teeth and shut your eyes.
Sixty three million baby!
The Nikkei 225 closed at 9,828.88 on Dec. 17. Since then it's up 1285 points, 13%.
And we were weeks late getting to the story.

From MarketWatch:
Asian stocks rally, Nikkei hits 33-month high
An improved economic outlook boosted Asian markets Wednesday, lifting stocks in Hong Kong and Australia to near two-year highs, while Japanese shares ended at their highest level in 33 months, also fueled by earnings optimism. 

Japan’s Nikkei Stock Average JP:100000018 +2.28% surged 2.3% to end at its best level since April 27, 2010. 

Hong Kong’s Hang Seng Index HK:HSI +0.71% rose 0.7% and Australia’s S&P/ASX 200 AU:XJO +0.16%  climbed 0.2% to reach their highest closing values since April 2011. The session marked a tenth day of gains for the Australian benchmark. 

China’s Shanghai Composite Index CN:000001 +1.00% added 1%, while South Korea’s Kospi KR:SEU +0.43%  and Taiwan’s Taiex XX:Y9999 +0.40%  each advanced 0.4%....
...MORE

*From The Quotations Page:
...It's been attributed to many persons, but seems to have its roots in the Bible:

It is better to remain silent and be thought a fool, than to open your mouth and remove all doubt . -- George Eliot
Better to remain silent and be thought a fool than to speak out and remove all doubt.-- Abraham Lincoln (also attr. Confucius)
It is better to keep your mouth closed and let people think you are a fool than to open it and remove all doubt.-- Mark Twain (1835-1910)
Even a fool, when he holdeth his peace, is counted wise: and he that shutteth his lips is esteemed a man of understanding. -- Bible, 'Proverbs' 17:28.

There are no citations for Lincoln or Twain. I have my doubts about Confucius.