A New Dawn for the Land of the Rising Sun?

Analyst Who foresaw Nikkei’s Plunge Sees Bull Move

by Peter C. Du Bois

Foreign Investment, International Trader, Barron’s – Market Week, June 22, 1998

“To his credit, Klein – who sends free to his clients the eponymous Sid Klein Daily Fax – called the top of Tokyo’s long bull market in the fourth quarter of 1989, and predicted a 50% drop.”

“Until about a month ago, Klein thought the Nikkei would drop through the bottom of this range and fall to about 11,000.”

“In assessing the outlook for Japan, Klein adds economic, financial and political analysis to his usual mix of momentum, Elliot Wave theory and time eyeles.  Briefly, he sees Japan’s ongoing banking crisis – with billions of dollars of bad debts still sitting on balance sheets – as the nation’s biggest problem, for the banking sector, the economy and consumer confidence.”

“By Klein’s analysis, foreigners were overweight Japan above 20,000 because they didn’t understand the full magnitude of the debt crisis, and believed the government was committed to solving it.  Meanwhile, Japanese corporations and the government were selling.”

“The Japanese government, which has a mandate to use public money to revive the banking sector, ‘is the biggest insider trader around,’ he says.  ‘That’s why [most] foreigners never understand how to read them.  This time, the surprises will be bullish.’  In his wildest dreams, Klein envisions a year-end 1998 buying panic, ‘as foreigners and Japanese individuals realise that the government and corporations again have nailed an extreme without them’”