This post is more like a rationalization to what's already apparent to many. With Warren Buffett calling for it, this decision doesn't require rationalizing.
Let me first write about "apparent to many" part. Currency of a nation is its ultimate asset and best reflects underlying strength of the economy; and country in times of disaster. Iceland's Krona is not an old story. After a disaster it should have been natural for Japan's currency to devalue but it strengthened to all time high with a very rapid fall in the markets. I was of the impression that currency got manipulated but it only made so much sense to have bought the Yen with almost +20% fall in the markets in a single jolt. That's why the Yen strengthened.
Let's first understand what really happened in Japan. 9.0 magnitude earthquake. Richter Scale is exponential (ok it's logarithmic but exponential is easily perceivable and that's not wrong). What does that mean? A 9.0 earthquake is 1000 times more powerful than a 6.0, 100 times than a 7.0. It's extremely rare. Once in a 20 year rare. Actually in term's of energy yield a 9.0 earthquake is 1000 times more powerful than a 7.0 one. A 7.0 earthquake should be enough to get noticeable cracks in buildings; 9.0 is 1000 times that.
Such a massive hit would had flattened any major city, in fact multiple cities. In a country like India many millions would had died, if epicenter was near a major metro. Japan had tsunamis and later reactor meltdowns. Almost 20000 died and hit to GDP is approximated at 3%. Some towns lost but major cities are unaffected.
With people willing to put their lives at risk to protect others, cities taking electricity cuts voluntarily and infrastructure to last for generations, this country is all set to emerge more powerful than ever before and faster than any estimates. Not to forget that there was no looting after the incident.
Japan's underlying strengths are too many and all to strong to make it an ultimate investment destination.
PS: We should drop the word scale from Richer Magnitude. It gives the impression that it's linear and undermines the extent.
I should mention that recent low by Nikkei was ~8200. It has since recovered by almost 15% but is still at a steep discount. May fall back to test the previous lows.
Let me first write about "apparent to many" part. Currency of a nation is its ultimate asset and best reflects underlying strength of the economy; and country in times of disaster. Iceland's Krona is not an old story. After a disaster it should have been natural for Japan's currency to devalue but it strengthened to all time high with a very rapid fall in the markets. I was of the impression that currency got manipulated but it only made so much sense to have bought the Yen with almost +20% fall in the markets in a single jolt. That's why the Yen strengthened.
Let's first understand what really happened in Japan. 9.0 magnitude earthquake. Richter Scale is exponential (ok it's logarithmic but exponential is easily perceivable and that's not wrong). What does that mean? A 9.0 earthquake is 1000 times more powerful than a 6.0, 100 times than a 7.0. It's extremely rare. Once in a 20 year rare. Actually in term's of energy yield a 9.0 earthquake is 1000 times more powerful than a 7.0 one. A 7.0 earthquake should be enough to get noticeable cracks in buildings; 9.0 is 1000 times that.
Such a massive hit would had flattened any major city, in fact multiple cities. In a country like India many millions would had died, if epicenter was near a major metro. Japan had tsunamis and later reactor meltdowns. Almost 20000 died and hit to GDP is approximated at 3%. Some towns lost but major cities are unaffected.
With people willing to put their lives at risk to protect others, cities taking electricity cuts voluntarily and infrastructure to last for generations, this country is all set to emerge more powerful than ever before and faster than any estimates. Not to forget that there was no looting after the incident.
Japan's underlying strengths are too many and all to strong to make it an ultimate investment destination.
PS: We should drop the word scale from Richer Magnitude. It gives the impression that it's linear and undermines the extent.
I should mention that recent low by Nikkei was ~8200. It has since recovered by almost 15% but is still at a steep discount. May fall back to test the previous lows.
Posts
0 comments:
Post a Comment