The Sun Also Rises

by Don Macdonald

 

The Gazette, February 12, 1999

 

“The Nikkei was up to 30 per cent in 1989 alone and hit 38,915.87 on Dec. 29, 1989.

As it happened, that day marked the top of the market and the beginning of the end for Japan’s economic miracle.  Nine long years later, the Japanese market is still mired in the worst bear market since the Great Depression.  Dec. 29, 1989, also marked a big turning point for a young Montreal stockbroker named Sid Klein.

 

“’For the last 10 years, I’ve identified virtually every high and low in the Japan market’ says Klein, a tall, intense man who lacks neither self-confidence or chutzpa.”

 

“In early October, Klein finally turned bullish on the Japanese market and is now predicting a long upswing for Japanese stocks.  Many of the ones he likes have been beaten down to book value or below.

‘What we are looking at is a low in Japan that is the same as the low in New York in 1932,’ says Klein, who is frequently quoted in Barron’s newspaper.  ‘And if you were in the right industries in 1932 you bought perennial family wealth that is still standing today.’”

 

Klein’s undaunted by the doubts of other Japan watchers.  He notes there was lots of bad news after the New York Stock Exchange bottomed in 1932.  Commodity prices slid until 1936, the depression dragged on until the beginning of World War II and then tens of millions of people were killed in the fighting.

Klein’s style is to perform technical analysis on the market and fundamental analysis on individual companies, while keeping a close watch on economic and political developments through news services and other research sources.”

 

“Academic research has found that historically there is a weak correlation between the performance of the U.S. and the Japanese markets.

The Nikkei has fallen 91 per cent in relation to the Dow over the last 10 years…”