Financial Thinkers See Silver Lining in Disaster

No one is belittling the disastrous events that are taking place in Japan. However, big names in the financial world are spreading the word that from a finance perspective things are so bad, and they stress that they are better than they would be had these events occurred on a less fortunate economy.

Here’s what they say:

Motley Fool’s Joe Magyer:

No one knows the potential short-term and long-term environmental impacts of a potential meltdown. Stocks have been drubbed as a result. The Japanese stock market fell 11% last night following a 6% drop the day before. U.S. stocks have also taken a spill, while stocks with even the most remote connections to nuclear power have been absolutely crushed.

Sound familiar? It should. The market’s spastic reaction to Japanese stocks and all things nuclear is an echo of the BP (NYSE: BP) oil spill crisis in the Gulf of Mexico…And what has happened since the depth of the BP crisis? Not only did the once-hyped story wash out of the news cycle over several months, but investors who had the nerve, patience, and long-view mentality reaped huge profits on all things Gulf.

BRETT ARENDS for Wall Street Journal

As traders like to say, don’t try to catch a falling knife. Anyone thinking of investing in Japanese equities would do well to take it in stages. The way to play a crash is always to buy little and often.

For a typical U.S. investor who wants to buy into Tokyo, the smart move may simply be to use a fund, particularly a low-cost index fund. Examples include the iShares MSCI Japan Index ETF* and the SPDR Russell/Nomura Small Cap Japan ETF.

Huffington Post: William Alden

In terms of the magnitude of the earthquake, the current devastation is far worse than in 1995 (Kobe, Japan). But in economic terms, it won’t significantly harm even the Japanese economy over the long term, experts say. The Japanese government has pledged various stimulus measures, and while the rebuilding process will be difficult, it’s unlikely to cause lasting economic damage.

All of this, of course, is speculation. The Japanese market is reacting by falling drastically as investors cash out. In reality there is no way to compare this disaster with the BP oil spill or past Japanese earthquakes.


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