Does a tree in a forest fall if no one hears it. We know the answer of course but we get the point.
In November 2013 I predicted Nikkei 20,000 and drew lots of charts showing the progress. It looks pretty good today:
Sadly this article created no headlines.
Yes I made money on the Nikkei.
So the 20,000 prediction is on the edge of coming to pass. As I write the Nikkei is 19754 a days worth of rally away from 20,000
Everyone in Tokyo is hoping that the index will hit 20,000 during cherry blossom time which is along with the rest of spring just starting.
Only the Japanese would conflate a flowering tree with the stock market.
The Sakura (Cherry Blossom) represents the Samurai and the underlying metaphor is of a beautiful moment in life that is a shower of ephemeral beauty that erupts in abandon then dies. In the hood this is called living fast, dying young and leaving a good looking corpse.
So is this what is going to happen to the Nikkei? 20,000 followed by bust?
The short answer is no.
Japan is starting to boom at least in Tokyo.
Hotel’s are full as a weak Yen pulls in record tourist numbers.
This is the tip of the iceberg of what a weak Yen is creating.
The Yen is weak because the Abe government via extreme pressure on the Bank of Japan has brought it about.
Japanese QE is in full force and the Yen is settling in at 120 to the dollar.
The dollar is going to remin strong of its own accord, because the US is the only country slightly pulling away from the looses monetary policies outside of war, in living memory.
The liquidity is finally finding itself escaping into the real economy.
It is tempting to expect this trend to suddenly reverse but in reality its going to go on for years. A the goodtime start to roll in the US, Japan and the UK, they will then roll in Europe.
So it is possible we will see a reverse of the developing/developed world dynamics when Brics rally as the first world slumps.
Yet developing world aside, the good times are back and they are only going to heat up further.
This is not a great moment for contrarian value inverstors like myself because we hate buying into expensive situations. For momentum investors its going to be great.
Japan is going to rock for a few years yet. Bubble and bust? Surely not again? It couldn’t happen with all these central banks running the show could it? Sarcasm aside.
It will bust, but don’t hold your breath, this is years out.