Japan: 'the bear market is over'

There is also the argument that as wages rise in China, there will be an incentive towards automation and generally replace labour with machines. I don't know which Japanese fund would best exploit that, if it happens.

The argument that Japan is cheap is nothing new. It has been cheap for as far back as I can remember, especially the small cap domestic stocks, and with good reason. Demographic situation aside, my main problem with Japan is the corporate culture: companies are there to serve the society first, and then make a profit for shareholders if they can. This is the only country where shareholders do not really have any power, which is why so many companies are run inefficiently and so many shareholder activists hoping to extract value have been disappointed. Japan is cheap, but it's cheap for a reason.

"19 major Japanese banks have been reduced to just one in the last twenty years". One of your analysts suggested (stated) that Japan could be (is) at the bottom of the credit cycle. I would argue that that assumption has to be correlated with the continuance of an aging population. Older people, who are a good credit risk, rarely borrow money, and when they do, it is only for a short period. The bottom of the credit cycle could last for many years.

I cannot see how monetary policy can be adjusted to cause the Yen to weaken, given that interest rates are virtually zero. All we can hope for is that other currencies will strenthen against it. The chances of that happening depend on the improving health of the US economy and the fact that the dollar is used as the major conduit and other currencies such as the Yuan are pegged to it.

Superior design and technical inovation are Japan's only get out jail cards.

How will the Japanese government engineer a cheaper yen? Their interest rates are on the floor anyway? If they try QE who is going to circulate the extra money in the system? Their consumers, industrial companies and banks are already cash rich. They don't need to borrow new money.

In the current Global climate even with a cheaper yen who would provide significant extra demand for cheaper but still relatively expensive and sophisticated Japanese goods if the USA and Europe is mired in recession.

Who is going to buy the Equities even if the first two events occur. Japanese investors have got used to sitting on cash which is a winning strategy in a deflationary environment and Western investors are fleeing equities for bonds.

It seems to me that only an outbreak of domestic inflation would change the fundamental investment culture within Japan and that would require a falling yen in a reinflating world .

It is probably true that Japanese equities would produce a spectacular return in those circumstances but those circumstances could easily take another three to five years to materialise.

Nothing stays in the doghouse for ever, short of revolutions that overthrow market capitalism, but I agree with the previous comment that it could just as easily be a few years, before the circumstances occur that would make Japanese equities a stand-out performer.

About Japan trying more QE, so far as I know the money created does not go to ordinary people, who might spend some of it if enough was handed out. If you found yourself wading through currency on the way to work, first you would not bother going to work, then you wouldn't even bother to pick up the currency. Somewhere between that situation and Japan's current situation, there might be an amount of new money that would undermine overconfidence in the currency without totally destroying confidence, but it's crucial that it goes to ordinay people, not rich people. That is not for socialist reasons, it's a matter of promoting spending not hoarding. It would of course need something a bit more equitable than dropping the cash from helicopters.

Unfortunately such distribution sounds socialist, radical, and probably crazy and won't be tried.

I am likely to be wrong, as are most amateurs who put the world right.

ruffer is bonkers

We have heard it all before re Japan. I have listened to too many people and lost money on Japan funds. Neptune has shown very poor negative performance over the past year. I agree Invesco and GLG are your best bets if the change is going to happen and things improve.