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Expat in Tokyo

Expat in Tokyo
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  • TheĀ Interest Rate Conundrum: Flight To Quality Or U.S. Slowdown? [View article]
    Are the charts off? Take a look at the present chart. It shows Dec 2014!

    Is the scale off? Please explain?

    Thanks!

    Expat
    Aug 13 10:02 AM | Likes Like |Link to Comment
  • What's The Future Of Housing? [View article]
    Ryan,

    agree with your general thesis. I like your charts they tell the truth that the boomer bulge out was a one time event and that the millennials are a little bigger - so there will not be a bog drop off when we boomers die off.

    I just don't see us boomers staying put. I think that we will move and buy houses where we want to live. Even lower middle class boomers can afford to rent in the sunshine states.

    I also think that we boomers will not transfer as much wealth as some have postulated because we will spend it! At least that is my plan!

    Thanks!

    Expat
    Jul 18 12:54 PM | Likes Like |Link to Comment
  • Aflac: A Solid Company Being Held Back By Its Exposure To Japan [View article]
    Colin66,

    Here are my answers to your questions.

    1 - Yes, Japan will attempt to inflate away there 250% debt to GDP.

    2 - Today's Japan federal budget is around 45% - I think - to debt payments with rising social expenses for their aging society - unlikely to cut spending significantly after Abe's massive spending ends.

    3- Once they start to sell US bonds the Yen will start to decrease relative to the dollar - Yen depreciation will begin.

    4 - Japan will not cut back on their social contracts they will just print Yen. Remember inside Japan it won't be as bad as it is for companies like AFL that need to convert from Yen to dollars. I do not see how cutting back on end of life care helps AFLs business.

    2nd paragraph - 100% debt to GDP in US versus 250% debt to GDP in Japan. No modern country has ever been indebted as much as Japan and had a good outcome! No precedence to argue they can have a soft debt landing. Their 10 JGB is under 1% what happens when it goes to 1.2% or even 1.5% - over half the budget will be to just pay interest on debt!!

    Third paragraph - there is no "not painful" solution. Even the one you pointed to is very very painful and will include Yen depreciation. The solution you pointed out will cause a severe recession and AFL profits will be hurt. I believe the least painful way for Japan is to depreciate the Yen and it will hurt AFLs profits.

    Thanks!

    Expat

    I argued for Yen depreciation in the next crisis and not default.
    Jul 14 11:02 PM | Likes Like |Link to Comment
  • Utilities And Rising Interest Rates: Fact Or Fiction? [View article]
    Very good article! I love challenging conventional wisdom articles!

    Long WR

    Expat
    Jul 14 10:39 PM | 2 Likes Like |Link to Comment
  • Beloved Aflac Co-founder Paul S. Amos Passes Away [View article]
    Positivethoughts,

    My hat is off to a great American businessman! We need more entrepreneurs like Mr. Paul and his brothers.

    AFL liabilities are in Yen for their policies in Japan. Japan requires insurance companies to maintain adequate reserves in conservative investments - not stocks! Just like the US states do.

    AFL has some wiggle room on what Yen denominated products they purchase - but not much - and AFL needs to match reserves with liabilities. I do not think they have many options besides JGB. They re not refocusing on JGBs they are aligning liabilities and reserves.

    Thanks!

    Expat
    Jul 4 08:28 PM | Likes Like |Link to Comment
  • Aflac: A Solid Company Being Held Back By Its Exposure To Japan [View article]
    Conkjc,

    I do not think AFK will fail - never said that. Only that their 75% of profit from Japan will shrink along with the stock price, dividends and buy backs.

    If the Yen depreciation happens 10 years from now, perhaps AFL will have diversified their customer base and the impact will be muted.

    AFL has their liabilities in Japan covered with Yen bonds, so if the Yen depreciates so will their liabilities (coverages). AFL is required by Japanese law to maintain reserves in Yen in Japan. Just like US insurance companies are here in the US.

    AFL knows all this and I am sure they are planning on how to handle a lot of different scenarios. That doesn't mean the profits and stock prices won't get hit.

    Thanks!

    Expat
    Jul 3 09:53 PM | 1 Like Like |Link to Comment
  • Clayton Williams: Momentum Continues [View article]
    Yes!

    George Mitchell and Clayton Williams - two truly great American business heroes!

    Leaders like these guys are under appreciated by our political class in Washington.

    We could use a lot more today!

    Expat!
    Jul 3 08:05 PM | 8 Likes Like |Link to Comment
  • Aflac: A Solid Company Being Held Back By Its Exposure To Japan [View article]
    Jim,

    Japan will not default on it 250% to GDP national debt and climbing it will just print Yen. (This is about 100% higher than Greece's national debt). Then the value of the Yen will drop substantially. Let's say it goes to 400 yen to the dollar in the next crisis. AFL 75% profit from Japan in this situation is now, in dollars, only 1/4 of 75%. Not enough money to pay the dividends and share buy backs. If AFL has not built up business outside Japan when this situation occurs the stock will tank. Currency hedging will not protect this Yen situation in the long term.

    That is the risk with AFL and just because they have no control over this risk - doesn't make an investment in AFL worth it - the reward risk ration needs evaluated by each investor. My view is if you do not understand the currency risk with Japan - you do not understand your investment in AFL.

    With that said I am long AFL, but watching it closely. I think we will have time to bail out of AFL before it tanks. I think it will be a slow moving train wreck. When it will happen no one knows.

    Thanks!

    Expat
    Jul 3 10:11 AM | 3 Likes Like |Link to Comment
  • An Overview Of The Single-Family Rental REIT Sector [View article]
    Good summary of the SFR REITs and lots of good comments. I have bought a dozen or so foreclosed homes and all required fix ups to the tune of 5-10% of the purchase price. This should be included in your cost analysis for returns.

    I read that most of these purchases were in bulk which means that they were likely spread across the good neighborhoods and bad. I have been a landlord since 1986 and the vast majority of my profit was determined when we bought the properties.

    Operational excellence will be required to consistently make high returns - especially when things get back to normal in the housing market. By normal I mean less stressed housing market, normal prices and normal interest rates. I just do not see REITs having the necessary touch to make that happen. The hardest part is to find the right workers.

    Even when I hire property managers when I am assigned overseas that have a a few dozen or couple hundred houses under management it is difficult to find a good manager. I have less confidence that the REITs are going to find enough good workers and reach the operational excellence to make consistent returns. Remember they have properties in many market and need to find lots of good workers with different skill sets in each of these markets.

    I think some will do okay but over the long term I do not see consistent rising returns. I will pass.

    Expat
    Jul 1 10:20 AM | 3 Likes Like |Link to Comment
  • MLPs And The Conspiracy Of Silence [View article]
    Great article!

    I am getting lax in this market of doing my risk analysis. My midstream MLPs are on your good list - because of your last article and some analysis. But my other MLPs and stocks are unknown because I have not been doing my risk homework.

    I am going to get after it!

    Thanks for the motivation.

    Expat
    Jun 22 10:20 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: What Does The Iraq Conflict Mean For Markets? [View article]
    Saudi Arabia gov't does not support ISIL - because ISIL supported attacks in Saudi Arabia when it was a part of Al Qaeda. Radical conservative Saudi citizens do support it - many of the fighters are Saudi. It no longer needs military or financial support for several years because of all the loot it gained taking the Iraq cities. ISIL needs more fighters to hold what they have taken.
    When Mosul fell tens of thousands of soldiers fled and left large arms depots behind and the banks were all robbed by ISIL. With 5-6000 fighters they have more miltiary weapontry now than they can use. They will be selling it in Syria and across the middle east for a nice profit!
    The big unknown is if the Sunni tribal chiefs will join ISIL and any significant number. If they do, then this could be a long civil war. If not it is a year long clean up of ISIL.
    Expat
    Jun 16 09:12 AM | Likes Like |Link to Comment
  • Is Aflac An Ugly Duckling Or A Beautiful Swan? [View article]
    I did it and it is wrong again. You cannot have a business where 75% of the profits are in Japan and have increasing dividends and buybacks without bringing lots of that profit to the US to pay for those actions! Where do those profits go? Buybacks and dividends exceed the US portion of the profit.

    Expat
    Jun 15 06:35 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: What Does The Iraq Conflict Mean For Markets? [View article]
    Iraq events impact to oil exports is minimal and investors should buy on any dips or take gains on the oil/energy stocks if they spike.
    Here is my rationale:
    1- Several thousand ISIL terrorists will NOT take over a country with a 300,000 man Army. They are only effective in Sunni areas and not liked by most Sunnis - even Al Quida threw them out! Vast Majority of the Sunni population - and tribal leaders - will stay on the sidelines.
    2- Oil fields for export are in the south in Shia country except for a little up north in Kurd area.
    3- Kurds will help the gov't once they leverage their position to get better terms for their oil exports up north and gain authority over Kirkuk for the long term.
    4- Expect a year long series of battles to remove all ISIL controls over the city they took. If I am wrong on tribal leaders not joining ISIL - it will take 2 to 3 years to get back to where they were.
    5- ISIL forces have captured enough arms and took enough money from the banks for 5 years of fighting. They are motivated too - so they have the resources to fight a long time - ISIL now needs to be defeated with military power.
    6-Shia will not let ISIL take their country - it would be a bloodbath - Shia will eventually fight.
    7- Saudi Arabia does not support ISIL - radical Saudi citizens do.
    8-Iran will support Iraq, but the real support will come from US Air Power - if the empty suite in the White House - cares to intervene. Either way the Iraq gov't will eventually win - it will just take a lot longer with out the US.
    It is a little funny that we support the Shia government in Iraq against Sunnis trying to take over and in Syria we support Sunnis trying to overthrow a Shia government.
    De Oppresso LiberExpat
    Jun 15 01:23 PM | 1 Like Like |Link to Comment
  • Week In Review: Oil Could Spike To $150 If Iraq Falls Into Civil War; Palladium Faces Pressure As Strike Nears [View article]
    Investors please get real on Iraq!

    ISIL - the sunni terrorist that have taken over the cities in Iraq will not disrupt oil production in Iraq. The vast amount of the production and export is in the South far from the Sunni areas. There are only a few thousand ISIL and the disintegrating Iraq army is around 300,000. Most sunni's do not support the radical ISIL that even Al Qaida disowned.

    The Iraq Army will get after them over the next year and clear the cities again. It will be messy and there will be some spectacular attacks - but the regime is not threatened and will prevail.

    The Kurds will take advantage, already have some, and gain control over their former lands around Kirkuk.

    If fears of an oil export disruption occur and drive prices higher - I plan to capture some gains.

    De Oppresso Liber
    Expat
    Jun 14 10:06 PM | 1 Like Like |Link to Comment
  • Is Aflac An Ugly Duckling Or A Beautiful Swan? [View article]
    A few issues hold back AFL.
    1) The Japan gov't debt is over 2 times GDP. It will be paid back with inflated yen someday. When that day comes the yen will drop and drop and drop - and so will AFL profits from Japan because they repatriate to dollars it will be a lot less money. They must bring it home or the 75% of profit from Japan is worthless to US shares. They cannot pay dividends and do share buybacks without bringing the dollars home - at least nor with the 25% of the profits from the US. The payment of Japanese bills for their policies is in Yen and the inflation is not a problem. They have yen bonds to pay for those future yen bills. When the inflation comes nobody knows today, but I think we will be able to get out in time. It could be a year form now or 10 years. Most likely the next crisis or recession IMO.

    2) A high unknown of the impact from the Fukashima nuclear disaster. I lived in Tokyo during the disaster and I personally do not think it will have much of an impact. Because the population in the area was small. But then again it is still leaking radiation into the ocean and that could impact the high population areas like Tokyo.

    I am comfortable with both of these issues to remain long on AFL - but I watch closely. I am looking to buy more below 60.

    The article lacked understanding of the AFL business model and risks with investments in Japan.

    Thanks!

    Expat
    Jun 8 03:01 PM | 2 Likes Like |Link to Comment
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