The Land of the Rising Profits

Remember Reaganomics? Well when the new year ticked over to 2013, it became the ‘80s all over again ... in Japan, anyway.

During the first week of this year, I told my subscribers in my Asia-focused trading service that “Japanese stocks — exporters in particular — are looking extremely attractive, and I expect the Japanese market to take off.”

The reason for that ultra-bullish prediction was because the Japanese government had recently introduced a number of structural changes designed to boost the previously morbid Japanese economy.

Those changes are already showing up in the form of growth in Japan's economy. On top of that, it’s been a pretty profitable year so far for Japan-focused investors.

You might have missed out on some of the early gains. But don’t worry too much about it, because there is a lot more profit potential in store for the foreseeable future that you can take advantage of!

In Japan, new Prime Minister Shinzo Abe’s vision of big government spending and easy money is designed to spur the stagnant Japanese economy. And his new era of “Abenomics” is already having a dramatic impact.

Earlier this year, the Japanese Cabinet approved a $113 billion stimulus program and the Bank of Japan has an open-ended, unlimited commitment to buy back enough bonds, mortgage-backed securities and stocks, to double the inflation rate to 2%.

The BOJ embarked on a $145 billion-per-month version of Quantitative Easing. To put that into perspective, our Federal Reserve is spending roughly $85 billion a month on open-market asset purchases.

And then in early April, the BOJ said it would pump $1.4 trillion in less than two years into its economy.

In addition to goosing the Japanese economy, these moves are designed to push the Japanese yen lower.

Why Would They Want to do That?

Well, a recent article in the main Japanese newspaper, The Nikkei, explained it well. It reported that a one-yen change in the dollar/yen rate would translate into a $2.7 BILLION increase in profits for the 30 largest Japanese exporters.

That strategy is working like crazy ...

The ETF that tracks the Nikkei is up more than 23% year-to-date. But if you'd invested in specific stocks or options instead, you could have more than tripled your gains!

Just since the beginning of April, the Japanese yen has lost about 10% of its value vs. the U.S. dollar. It’s down 18% since the beginning of the year against the dollar.

While the yen is at a four-year low, the Japanese Nikkei 225 is at a five-and-a-half-year high, having rallied by just shy of 50% this calendar year alone.

How much money could you have made if you acted on my recommendation to go long Japan equities?

If you were a subscriber to my service, you’ll recall that I recommended buying call options (a bullish move) in a Japanese stock and a Japanese index.

Call options are contracts in which the buyer has the right (but not the obligation) to buy a specified quantity of a security at a specified price within a fixed period of time.

The advantage of call options is that you can control the same amount of stock for a fraction of the price. And you don’t need a calculator to figure out that if you spend much less money and make almost the same profit, you’ll have a higher percentage return.

When options pay off .... they can offer gigantic returns. For example, I recommended two Japanese options this year:

  • Toyota (TM) July 2013 call options with a strike price of $100
  • The iShares MSCI Japan Index ETF (EWJ) June 2013 call options with a strike price of $10

My Asian Century subscribers bought the Toyota options for $6.85 and paid 42 cents for the Japan ETF options.

Yes, just 42 cents.

As of last week, those same options were trading for $22.85 and $1.98, respectively.

In percentage terms, that works out to a gain of 233% on the Toyota options and a 371% gain on the Japan ETF options.

The best news is that I am confident that Japanese stocks are headed higher. A lot higher.

That doesn’t mean you should jump into Japan’s stock market tomorrow morning or buy those options on Toyota or the MSCI Japan ETF. As always, timing is everything so wait for my buy signal in The Asian Century.

And if you’re not part of my newsletter family, I hope you’ll join my family. I believe you would be very happy with the results.

Best wishes,


P.S. Within just 2 months of recommending those options, my Asian Century members were able to take gains off the table of up to 101% in TM and 54.8% in EWJ.

In fact, my subscribers just closed two more trades yesterday for double-digit gains. In fact, one of those trades only took 3 trading days to play out! Find out how you can start making these kinds of low-cost, short-term and high-potential trades on some of the world's most-powerful trends — click here right away.

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Posted 05-28-2013 10:48 AM by Tony Sagami