written by reader Shorting Japan

By Anonymous Questions, March 4, 2014

Does anyone have a recommendation for shorting japan?

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March 6, 2014 11:12 am

I heard that buying options to short AFLAC out of the money will do well when the Japanese bug finally finds a windshield to splatter against. I invested in a January 2015 put @ $25….AFLAC is known for the duck but they are kind of a big deal in japan, like the T-Shirt says…do ur own due diligence…

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March 6, 2014 7:35 pm

Shorting Japan sure looks good on paper. Their companies are overvalued and their currency is bound to plunge going forward as they become more and more clearly insolvent.

However, I think that’s a dangerous game just now because of a huge inflow of new funds coming to their stocks in the coming months. It looks like the GPIF (government pension fund) is trying to move money out of JGB’s and their hopelessly low yields and into stocks and REITS. You can pretty much bet that the bigger companies will get irrational levels of support for the next while. IMHO Abenomics’ “success” in the last year was primarily predicated on that move from JGBs into stocks and enhanced by people’s added interest in stocks. In addition, there’s now a NISA scheme where households can invest 1Myen (10,000USD) into mutual funds or stocks tax-free for 5 years. Most people seem to be choosing REITS or Nikkei-based funds. Again, I expect regular Japanese people to be attracted by this plan and to shift savings from cash into NISA over the course of the year and possibly even MORE next year when reports of early-adopters success filters through to more of society.

OK, that was long, sorry. Main point: I expect major indices to be biased upward in Japan for 2014-15 couple with a drop in JPY value.

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