Back on Oct. 22, I wrote about how Japanese stocks were about to rally
, especially the Nikkei. I talked about how one of the huge catalysts for this would be the sell-off in the Japanese yen.
Well, today, everyone is talking about that. But back in October, hardly anyone was onto what was about to come.
Now the yen has fallen 9 percent in around two months’ time. That is huge. Sometimes a currency will move that much in nine months to a year. However, for that to happen within around 60 days is almost unheard of.
So I am sure many people are thinking the yen’s descent is close to being over. But the truth is that it is still just getting started. What? Yep, you heard right.
How do I know? Because of the chart patterns, particularly long-term chart patterns on the weekly charts of currency pairs like Australian dollar/Japanese yen (AUD/JPY), New Zealand dollar/Japanese yen (NZD/JPY) and the euro/Japanese yen (EUR/JPY).
There are rectangle patterns on AUD/JPY and NZD/JPY that just broke out. The size of the pattern in AUD/JPY projects a minimum price target that equates to a return of at least a 19 percent move in the pair.
In NZD/JPY’s weekly rectangle pattern projects a move of at least 17 percent. And EUR/JPY’s weekly “falling wedge” pattern projects a target, which would reap a return of 20 percent minimally.
Therefore, the yen is still projected to move another 17 to 20 percent over the next year or two, as these patterns reach their minimum price targets. That’s huge.
So while the yen could rally some here and there and while the Nikkei could pullback some too, overall we’ll see the yen continue to slide for at least a year or two and we’ll continue to see Japan’s Nikkei rally as a result.
You see, even after the huge run-up that we’ve seen in the Nikkei, many of its stocks are still trading at price-earnings (P/E) ratios of 10 to 14, which is still less than the P/E of the Standard & Poor’s 500.
Therefore, Toyota, Honda, etc. will continue to rise as the Nikkei rises and the yen falls.
In my Ultimate Wealth Report newsletter, I just initiated a position in a Japanese company that has much better fundamentals than any of these. You see, the challenge with Japanese stocks is to find a company there that isn’t strapped with a huge load of debt.
You can look up just about any household name you can think about, such as the ones mentioned above, and you’ll find that they are huge companies at decent valuations, but they’re debt-laden.
Therefore, if you want to buy a company that isn’t loaded with debt, come join us in the Ultimate Wealth Report and I’ll show you the better way we’re playing this move in Japanese stocks.
My pick has a very low P/E and that has lots of cash on its books. This stock even trades under its book value, which means it trades under its liquidation value. Yet this huge, $60 billion company only carries around $3 billion in debt. So its debt-to-equity ratio is ultra-low.
Many people view “managing risks” in different ways. One way I manage risk is by how picky I am about what I buy and the valuation at which I pick it up.
When you’re buying a multi-billion dollar company that carries low debt, trades under its book value, has billions in cash and earns billions of dollars each year, yet trades at a P/E in the 9 and 10s when many stocks are trading at P/Es of 14 to 16 right now, I believe you’re managing risks by the quality of what you’ve bought and the price that was paid for its level of earnings. This is one of the best ways that I know of to truly manage your risks.
So come see how I pick stocks in the Ultimate Wealth Report and I’ll show you how we successfully pick stocks from all over the world that can easily be traded right through your regular stock brokerage account. Check it out at www.seecurrencywars.com
About the Author: Sean Hyman
Sean Hyman is a member of the Moneynews Financial Brain Trust. Click Here to read more of his articles. He is also the editor of Ultimate Wealth Report. Discover more by Clicking Here Now.
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