I have made some recent portfolio adjustments to rotate into more undervalued stocks. Specifically, I have liquidated my positions in CRWS and VCLK, which have nearly reached my target prices. Of course, as soon as I sold my VCLK shares, it rose another 10%. But then again, VCLK has already risen more than 25% off my purchase price, and I am usually early both in entering and exiting a position, so this is just par for the course.
I have begun to acquire a full position in TUC, and am in the middle of researching additional stocks. I am currently toying with the idea of buying some Japanese stocks. For more than a decade now, the Japan’s economy has suffered from deflation while the Japanese saved ferociously. The currency carry trade, where the zero-yield yen is exchanged for higher yielding US dollars and other currencies, has been especially popular in Japan. Now, as the US Fed embarks on a quantitative easing spree, it will probably cause other major economies around the world to also print money to prevent their own currencies from strengthening and placing their exporters at a competitive disadvantage. This rise in worldwide liquidity is going to send a flood of money towards commodities and hard currencies, and I predict that soon, it will be difficult to find safe currencies or bonds that yield above zero. Japanese savers will soon face rising costs in oil and food, declining yield on their savings, and increasing numbers of people past their retirement age, all of which suggest that domestic demand may soon pick up. In effect, other countries will achieve for Japan what its own central bank has consistently failed to do, bring the economy out of a deflationary spiral by lighting the fires of inflation. And of course, Japanese stocks are incredibly cheap right now. I am debating between buying a Japanese ETF like EWJ, or actually holding the stock of a specific Japanese company that I have researched. I am leaning towards the latter option, but the language barrier is a big obstacle, and I may be limited to companies that issue their reports in English. But even in this subset of companies, there will probably be some gems.
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