31Aug10:40 amEST

Land of the Something Sun

News of Warren Buffett investing about $6 billion into five Japanese trading firms is an interesting development considering his recent sales in U.S. airlines and banks. Indeed, after several seemingly lost decades since an epic bubble from 1986 to 1991 (for both stock prices and real estate) burst, it has been tough to discern whether the sun is, in fact, rising or setting in the Land of the Rising Sun. 

However, with Buffett now having clear skin in the game it may be time to examine the value of Japanese equities at this moment in time, especially compared to how beloved and overheated many top Nasdaq names are here in America. 

On the EWJ monthly chart, below, which is the country ETF for Japan, you can plainly see several decades of whipsaws in one massive, generational range. This is a very long time to go without any real progress, and the BOJ's various policies probably only reinforced the notion of Japanese "zombie banks" since the bubble, meaning debt-laden firms which probably should have perished during the fallout but were kept alive by Central Bankers. In some respects, the BOJ was out in front of The Fed. While our Fed Chairs over the years were well aware of the moral hazard in Japan, they always seem to insist that America is different, and maybe it is. 

Either way, the net result is many of Japan's top equites housed in the EWJ, like Toyota, Sony, SoftBank, Nintendo, etc., could use the Buffett news to feel galvanized for a multi-decade breakout over $60, which is an initial level I am watching to confirm a possible rotation setting up out of America and into Japan, whenever our mini-top-heavy QQQ bubble cools off. 

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