Buying stocks

[Dutch Baka]

I am planning on staying in Japan for a long period, and maybe even until they end of time (hopefully that's going to be a long time). Because I am not so sure (yet), about paying for my retirment (I find 13000 yen a lot every month) I am thinking a bit about buying stocks. My father in law also is in the stock market business and I know he makes some money out of it.

But, I am new to the stock market and want to learn the basics, and how to buy stocks in Japan. So I am hoping to read some stories from the experts, or some links on buying stocks in Japan etc.

(I was thinking of becoming a host... but.... well.... yeah... never mind :p)

[maushan3]

I congratulate you on making one of the best decisions of your life. Not many people know the wonders that stocks do. Well, the stock world has two options for you to invest in: You either invest on a certain company (e.g. Sony) or you invest on many stocks (around 30).

Now, I understand that you need a huge investment in order to have a share of a company. I might be wrong, but my dad was disappointed when he found out that, haha.
But one good thing is that bankers and entrepreneurs realized many people could not afford the afforementioned stocks, so they made up less expensive funds. These are ones that you can buy for not so much and it includes many companies. Like, for example, in Japan this kind of fund would be the Nikkei 225, similar to the Dow Jones index in the U.S. So when you see in the newspaper that the Nikkei lost/won whatever much percent in one day, they are talking about this.

Right now, stock markets worldwide are going through a phase, but don't let this discourage you, remember, you want this for the long run. I'm sure you will want to live long enough to enjoy all that money you'll have.

So, ask your father-in-law what's good as far as stocks or funds go in Japan, where to go, etc.

http://chinese-school.netfirms.com/abacus-stocks-Japan.html
http://metropolis.co.jp/moneytalks/281/moneytalksinc.htm

And this following just if you need to know more about stock markets:
http://en.wikipedia.org/wiki/Stock_market

(I was thinking of becoming a host... but.... well.... yeah... never mind :p)

You say you want to live til the end of time, so, either you become a host, or live a long life.

Mauricio

[Mike Cash]

Check with your bank about the possibility of online investing in mutual funds. My bank (Gunma Bank) offers this service, and if those bumpkins can do it, anybody can.

[Dutch Baka]

any change of buying stocks in Japan without knowing a lot of Japanese ???

If not, then I guess I have to wait a couple of years.

Thanks for the information you guys, I will look into it a little bit more. Have you guys earned some money with buying stocks?

[maushan3]

Have you guys earned some money with buying stocks?

I finally invested some money in the Mexican Stock Exchange. it was my money with my mom's name on it, since I'm not legal age yet. I bought the Index stock fund. Minimum invetment here in Mexico is 10,000 MXP, which is a little more than 900 USD. So, yeah, I have made some money. It was going great, until a couple of months ago when it began losing and losing like other world markets, but I know this will take some time so i don't worry about anything.

Mauricio

[ET_Fukuoka]

I invested from Japan but I used an American site. I did a lot of options so i used optionsxpress.com while living in Japan. At first I used my Japanese address but after a while some law changed and I had to use a US address. When I buy stocks I usually buy US stocks or Foreign companies ADR stocks.

That being said I have a friend that invests only in the Japanese stock market and is making a killing (he cant speak, read or write Japanese). I believe it takes a lot more money in Japan to be a stock investor, but don't quote me on that. I know in the US I can buy 1 stock if I want, not sure if that's the case in Japan. You might have to buy a block of 100 or something. Hopefully more people will chime in with more accurate information.

If you dont know what you are doing I would say buy a Vanguard Mutual Fund as your main retirement fund, and play the market with other money. Thats what I do. You can pick a fund that only deals with Japan or Asia or just about any kind of fund you could think of. I actually have my 401K split up into 4 funds, 25% each. I started playing the market with about $1000 USD in my options account and eventually put another $2000 USD. I have made money and lost money but all together I am doing very nicely!!

I am planning on staying in Japan for a long period, and maybe even until they end of time (hopefully that's going to be a long time). Because I am not so sure (yet), about paying for my retirment (I find 13000 yen a lot every month) I am thinking a bit about buying stocks. My father in law also is in the stock market business and I know he makes some money out of it.

But, I am new to the stock market and want to learn the basics, and how to buy stocks in Japan. So I am hoping to read some stories from the experts, or some links on buying stocks in Japan etc.

(I was thinking of becoming a host... but.... well.... yeah... never mind :p)

Start watching Mad Money if you have CNBC if not there is a Video and Audio Podcast on iTunes. Just search for Jim Cramer

http://en.wikipedia.org/wiki/Jim_Cramer

I love this guy!! He tries to teach people not just give them free tips.

[Pachipro]

Given the volitility of the markets today, I would not recommend investing the the market until the US goes through it's mess with the sub-prime mortage debacle in the next year or two. Foreclosures, defaults, and late payments are reaching an all time high because of this. Today the markets were up over 250 points while on Friday they were down over 250. I believe that the US market is set for a correction that will bring it down to 10,000 or below. As the US goes, so does the rest of the world.

When I left Japan at it's peak in 89, the Nikkei was at about 39,000 because of land speculation. By 1992 it was at 14,000, a more than 60% drop! The US is going thjough the same exact thing right now with the boom in housing and land prices these past several years and a correction is forthcoming.

Although investing in stocks is legalized gambling, if you're going to do it you should check into Mutual Funds as Mike mentioned as they are spread among a wide variety of stocks and decreases your risk. You might also want to check into Stock Index Funds where you invest in a certain sector like technology or commodities.

Before you select a mutual fund make sure the fund has been open at least 5 years and check their 3, 5, and 10 year rate of returns. I would not suggest getting into one that does not have at least a 5% return for a minimum of 5 years. Most of all do your homework before investing! Invest wisly and you can average at least an 8% return.

Your best bet these days would be in commodities or precious metals mutual funds or index funds.


Have you guys earned some money with buying stocks?

Yes. I made much money during the technology boom of the late 90's that enabled me to pay off my house in 6 years. However, the crash in 2001 took most of my profits away and it took three years to regain those profits as I was invested heavily in individual tech stocks and agressive mutual funds. Big mistake. With the volitility in the world today and the problem with sub-prime mortages in the US, I have been out of the market for two years and am just sitting around waiting for the crash before I get back in. This time I will be more conservative. However, investing in the market is still a wise choice if you do your homework.

However, your money can still grow. With all the on-line banking going on today they are offering great interest rates of more than 5% for CD's and money market accounts and some even allow you to invest in overseas CD's or currency. Many are also insured against losses. Whether you can invest in one while living in Japan I do not know, but you can send them an e-mail to inquire as all it will take is an electronic transfer. The on-line bank I use for my yen savings accounts and CD's and such is Everbank (https://www.everbank.com/). Through them one can also invest in the market.

Dave and maushan3, you are still young, so if you start investing wisely now, you will be more than comfortable by the time you retire. If I had started investing at your age instead of waiting till my early 40's I would be wealthy beyond imagination now. Also, to give you an idea of how much you will need to save for retirement check out this link at Bloomberg (http://www.bloomberg.com/invest/calculators/retire_income.html)and play around with their retirement calculator. They also have other calculators that you can play with. It's in dollars, but you can still figure it out in yen.

Most of all, to gain wealth don't spend more than you make (if you can't pay cash for it, then you can't afford it), stay completely out of debt except for your mortage, buy a used car (as it is a depreciating asset), save money on a regular basis and invest wisely. Easier said than done I know, but it can be done. Good luck.

[GaijinPunch]

Have you guys earned some money with buying stocks?

I highly recommend you go back and read what Mike said. Get into Mutual Funds, and get a professional to pick some out. I have an Edward Jones account in the US. I tell my advisor my age, when I want to retire, and all that. He picks a few funds that I invest in and that's it. If you get a professionally managed account at Fidelity they will trade it like a stock...that goes against the whole idea of mutual funds. Trades happen within the fund. Basically, 1 fund offers diversity, which 1 stock simply cannot do. You spread your risk without having to do research on a bunch of stock.

I believe that the US market is set for a correction that will bring it down to 10,000 or below

I would almost never recommend waiting 2 years to invest your money. I put mine in at a very questionable time, and even w/ the crappy last two weeks, it's up over 8% per year for the last 2 years. Assuming you're somewhat young, you can take a hit now and recover later. That is basic investment strategy. Nobody knows what's going to happen, though, obviously.

[Pachipro]

I would almost never recommend waiting 2 years to invest your money. I put mine in at a very questionable time, and even w/ the crappy last two weeks, it's up over 8% per year for the last 2 years. Assuming you're somewhat young, you can take a hit now and recover later. That is basic investment strategy. Nobody knows what's going to happen, though, obviously.
I believe you were referring to me waiting around till the crash before I get back in. You are correct in that you can take a hit while you are younger, but it all depends on what kind of hit you take. I am 53 and looking to retire in a few short years so I cannot afford to take another big hit right now. However, I am still making 5% in CD's and money market accounts. Also, I know the yen will strengthen again to around 100yen/$ so I bought tons of yen at 120 -124/$ and will keep it in yen for my move back to Japan and will realize a more than 20% gain vs. if had I waited till I moved to buy yen when it would be around 100/$ or less. It is free money.

Lets look at the Nikkei in '89 as I mentioned above. Within three years it took a more than 60% hit. Today, in 2007, it is still around where it bottomed out in 92. Therefore, if you were invested heavily in stocks and/or mutual funds back then, you STILL HAVE NOT recovered your investments/losses today, 15 years later. Also, if you had invested in real estate back then, your real estate is still not worth what you paid for it at the peak of the bubble.

With the great crash of 1929 that led to the great depression, people who who took a huge hit and still stayed in the market DID NOT recover their losses until the early 60's! Some 30 years later!

Therefore, the notion of staying in the market through thick and thin is ok for minor bumps, but when a bubble is about to burst as it did in Japan in 92, and in the dot com boom of the late 90's through 2001, and definitely will in the US in the near future because of sub-prime mortages and the credit crunch, it is best to have as much info as possible, take your profits now and wait it out on the sidelines. When the market crashes, then get back in when stocks will be really cheap.

The old saying of "the smart investor getting out when the market is rising" is true. Those that got out in '29, '87, and 2001 in the US and in Japan before '92, took there profits and bought back in real cheap and made probably more than triple or more what they would have made had they stayed in.

Information is the key when to get out and when to stay in and what is really happening in world markets. Many people spend a couple of hundred, or even thousands of dollars per year for those newsletters that tell you what is really happening, what stocks will get hot, when there is a bubble, etc., and they are well worth it if you buy the right ones.

Sam Walton, the founder of Wal-Mart had a philosophy of "Watch what everybody else is doing and do the opposite." I beleive he knew what he was saying.

[junjunforever]

Dutch Baka.

If you have no knowledge of the stockmarket, and is short on Japanese, i suggest you invest in the ETF index funds available through internet sites, namely E*Trade, Scotts Trade or sharebuilder. I have used sharebuilder.com because they had no minimum balance required, and I got involved with limited money ($1000 4 years ago).

The quality of mutual funds have been debated for nearly a century, and all records indicate mutual funds earn slightly more than index funds, but when you take fees (2%-4%) into account, index funds end up earning more. It may be "boring" but an average person is better off investing in index fund.

Now i am assuming, you are no special genius in stock investing, just like me, and have no ability to forsee the future. As Pachipro said, getting out when the stock market is rising is a great thing to do, but the only problem is you dont know when the stock will start to fall. 30%? 50%? The great investor Peter Lynch has come up with the term "bagger" as in that stock was a 5 bagger if it increases 5 folds. So there are cases where great investors have waited 500% for their stock value to go up. Actually, the philosophy of the greatest investor, Warren Buffet, is to hold most of the stock for life.

If you would like to pick individual stocks, I would suggest you do some studying in the subject. As Ben Graham said, expecting a half decent profit from half decent involvement in stock is foolish. You either do a lot of studying and pick individual stocks, or just buy mutual or index funds.


As for my view of the stock market, i think both the U.S. and Japan will go up for the next couple years. U.S. stock market is similar to the levels in 2001, and Japanese stock market has shown increase for over a year now. Purchasing Citi stock yesterday (last i checked) would have given you over 4% in dividend yield alone. Similar situation wth JP Morgan. As for japanese companies, fundamentals are strong. Companies are reporting strong earnings (albeit at the cost of common employees) and foreign investor's interest in Japanese market is starting to reinvigorate.

Just stay away from all the internet stocks as i think they are STILL overvalued (including Google), except maybe Yahoo. And i pray no one here purchased the grossly overvalued Mixi stock.

[Pachipro]

As for my view of the stock market, i think both the U.S. and Japan will go up for the next couple years. U.S. stock market is similar to the levels in 2001, and Japanese stock market has shown increase for over a year now.

Japan maybe, but not the US. If the markets, as you say, are similar to what they were in 2001, then we are definitely headed for a crash. There is no way on God's earth it can go up with the suprime mortgage and hedge fund problems. There must be a correction as will be forthcoming.

Bear Sterns announced yesterday the bankruptcy of two of their hedge funds dealing in subprime mortgages and credit. Please read the links:

And now we present you the opportunity, once again, to stop listening to your friends, your broker, your brother-in-law, or any other ****** whose money is probably trapped in a hedge fund right now, and face reality like a human being. It's time to implement LaRouche's solution to the decaying financial system.

And [URL]http://www.msnbc.msn.com/id/20075984/

Also, American Home Mortgage announced they are in bankruptcy: http://www.suntimes.com/business/499480,CST-FIN-Mort07.article

American Home Mortgage's 40 biggest creditors include virtually all the major names of Wall Street. At the top of the list are Deutsche Bank AG and JPMorgan Chase.

Anyone, no offense junjunforever, who believes the US markets will go up in the next two years is severely misinformed, does not really understand the markets in their truest sense, and only gets their news from from seven second sound bites on TV and newspapers and CNBC. There is no way the markets can go up unless there is mass manipulation by the Federal Reserve.

Please, before you make assumptions, have your facts in hand and know what you are talking about.

[frostyg02uk]

Im extremely interested in how to enter stocks but to be blunt I dont have a clue what to do haha. Im learning about economics at the moment (at university) so it could be something i could branch out to in the future. Pachipro was talking about house prices before and while it seems to be crashing in America the UK has been bulging for years with no sight in end (i read today that by 2012 there is an expected 40% profit but getting into that market in the first place is expensive). It will have to be something ill need to study but being a student with zero funds from my parents getting into stocks will be hard.

[Pachipro]

Pachipro was talking about house prices before and while it seems to be crashing in America the UK has been bulging for years with no sight in end (i read today that by 2012 there is an expected 40% profit but getting into that market in the first place is expensive)

Don't fall into the trap that the Japanese and Americans did frosty. First, is there severe advertising to refinance your mortgage and do they have low variable interest rates for "first time buyers" in which anyone can buy a home? If so then look out.

A recent article from the BBC (http://news.bbc.co.uk/1/hi/business/6922109.stm)says that housing prices in the UK are 20% overvalued.

Out of 16 countries examined, the UK economy was the third most sensitive to higher interest rates, Fitch said.

Countries where variable rate mortgages are in vogue, such as the UK, would feel a greater impact from higher interest rates, Fitch said.

The key is to suck you in to refinancing or purchasing your first home and then they slam you later with a higher interest rate which the normal person cannot afford. This keeps the economy going (in the short term) and makes everything look rosy and good. Far from it.

This link (http://www.housepricecrash.co.uk/)will also show that the UK housing market is in for a crash similar to Japan and the US and believe me it WILL happen as the central banks of the US, Japan, and the UK want it to. Right now the UK is keeping the economy afloat with variable rate mortgages, but do not fall for it as they have nowhere to go but up. The UK and the EU will be the next to feel the crunch.

If you're interested in buying a home in the UK, wait it out as prices will fall as they did in Japan and are now doing so in the US.

If you do purchase a home NEVER buy with a variable rate mortgage; only have a 15 yr fixed rate mortgage and, if you cannot afford a 15 yr mortgage, don't buy as you probably cannot afford it anyway. Having a 30 yr mortgage or more will only cost you hundreds of thousands of pounds/$/yen in interest.

[ET_Fukuoka]

I dont think Google is overvalued! They are doing the we are never going to split model so it will take you a lot more money to get into it.

IMHO, now is the time to be in the market! You have a good few years before the market is going to "crash", if it does. If you are investing in stocks you have to watch your account. I made a killing in the .com boom and got out at the top! A lot of people were just too greedy and they got brunt. Same thing is/will happen with the housing market. Everyone and their uncle is / was trying to buy and flip houses, getting interest only loans, etc. They are going to get burned or are currently getting burned.

Education is key! Even with mutual funds! Listen to what everone here says with a grain of salt. Do some research and get yourself up to speed. The good thing is that you are actually getting started! The sooner you start the better.

[frostyg02uk]

I see thanks. Here in the UK its hard to get on to the property ladder at the moment even for young professionals but i was thinking of buying our council house through my mothers name (as the last 11 years of rent come off the top price). I cannot see any end in the rising of prices here as we are running out of land to build new homes but for years and years its been going up and up..and its bound to crash at some point. If i had the cash i'd buy abroad and rent. I agree that homes here are very over priced especially in key areas such as London (new flats in manchester 1 bed room are starting at 100,000£ roughly 200,000$ or 25,000,000 yen) which is almost impossible to buy for young people with student loans still and low wages.

If i was to try some stocks as a beginner id try and get some low risk ones with minumum investment till i get the hang of it. Maybe I can get a book on stocks i can read haha...but in the long run id like to be able to know what and what not to invest in without needing tips or an advisor that wants a piece of my profit.

[ET_Fukuoka]

They say to invest in what you know, and to buy low and sell high. Half of the stock market is luck and the other half is research. I would read books from the conservative folks and then some books from the aggressive folks, just so you can get a good perspective. Open up a virtual trading account and try using some virtual money to see how you do.

[junjunforever]

Japan maybe, but not the US. If the markets, as you say, are similar to what they were in 2001, then we are definitely headed for a crash. There is no way on God's earth it can go up with the suprime mortgage and hedge fund problems. There must be a correction as will be forthcoming.
Bear Sterns announced yesterday the bankruptcy of two of their hedge funds dealing in subprime mortgages and credit. Please read the links:
And [URL]http://www.msnbc.msn.com/id/20075984/
Also, American Home Mortgage announced they are in bankruptcy: http://www.suntimes.com/business/499480,CST-FIN-Mort07.article
Anyone, no offense junjunforever, who believes the US markets will go up in the next two years is severely misinformed, does not really understand the markets in their truest sense, and only gets their news from from seven second sound bites on TV and newspapers and CNBC. There is no way the markets can go up unless there is mass manipulation by the Federal Reserve.
Please, before you make assumptions, have your facts in hand and know what you are talking about.

No offense taken. Predicting the future is actually just a guess game, for me, for you and all the so-called analysts and economists as well.

What i meant with my similarity to 2001 comment, was that i was talking about the stock price. Not the economic indicator. In 5 years, stock market has increases gained only very modestly.

I mean, just look at the stocks. Toyota is selling at P/E ration of 12, Citibank and JPM and little bit above 10. These are historically low figures. the U.S. stockmarket is "undervalued". Warren Buffet takes this position as well (one of the few investors i would ever trust), and have openly talked about spending his multi-billion cash stash. if i had to choose anyone in the world about the future outlook, i noone would beat warren buffet.

[junjunforever]

I dont think Google is overvalued! They are doing the we are never going to split model so it will take you a lot more money to get into it.



now this is a fun discussion.

Google common stock is currently valued at 160 billion with 3 billion in net income.

JP Morgan is valued at 150 billion with 11 billion in net income.


I understand Google is a "growth" company. But JP Morgan themselves have doubled their revenue and tripled their net income in the past 2-3 years as well.

Also, Google's profit ration on equity and assets far outstrip the likes of Yahoo (3 times that of yahoo, which is a good sign). But this likely means their net income will increase along (only) with increased sales. They will have to more than triple their revenue to have the same price per earning ratio to equal JPM.


But if people make more money through google, i think it will be through selling stocks to even more speculative people, not because of its value. Like ET_fukuoka, perhaps millions of people made billions of dollars buying and selling stocks that lost billions of dollars in its short life. Certainly, people can make billions more trading google, which is a very healthy company (just not rightly priced).

Needless to say, i am a pessimist in growth stocks. Google may well prove me wrong and make millions for the current stockholders. However, Goog is not a risk conservative investors should take.

[GaijinPunch]

I believe you were referring to me waiting around till the crash before I get back in. You are correct in that you can take a hit while you are younger, but it all depends on what kind of hit you take. I am 53 and looking to retire in a few short years so I cannot afford to take another big hit right now. However, I am still making 5% in CD's and money market accounts.

I was basically referring to "not putting your money to work at all". If you don't feel safe w/ the market, then yes -- there are other low risk alternatives.

Also, I know the yen will strengthen again to around 100yen/$

Really? I actually just made 5,000 yen on a bet w/ someone who's job it is to track trends. When it was 122, I bet it would hit 118 before 125. He was going off of books... I was going off of living here for years. Ironically I lost way more than that b/c I'm paid in dollars. But the point is, nobody really knows what's going to happen.

so I bought tons of yen at 120 -124/$ and will keep it in yen for my move back to Japan and will realize a more than 20%

The other thing to look at is, when will it hit 100/$1 (which is very optimistic mind you). If it takes 2 years to get to that level, then you're FX investment is basically performing on par w/ a decent mutual fund portfolio, and under performing a good one. In that sense, it's not exactly free money, although I would almost always think buying yen at 124 is a great deal. Also, does this yen earn interest, or is it in a Japanese account?

Therefore, if you were invested heavily in stocks and/or mutual funds back then, you STILL HAVE NOT recovered your investments/losses today, 15 years later.

If you had invested in stock-heavy mutual funds. There are bond-heavy and of course all other combinations of mutual funds out there. That's the beauty of them. Japan's crash was a pretty unique one. They had a broken system but their reclusive nature kept it shielded from the rest of the world. You do realize that such a crash will nix your FX investment as well, right?


Also, if you had invested in real estate back then, your real estate is still not worth what you paid for it at the peak of the bubble.

That is the exact definition of losing out on any investment. Nothing is ever worth what it was worth at it's peak.

When the market crashes, then get back in when stocks will be really cheap.

So you foresee a crash on par w/ the Great Depression, or even Japan's crash in the late 80's?

Sam Walton, the founder of Wal-Mart had a philosophy of "Watch what everybody else is doing and do the opposite." I beleive he knew what he was saying.

Everyone else must've not been completely abusing their employees.