Monday, June 25, 2007

Continued discussion with a Money Manager from St. Louis...

The latest rejoinder by yours truly, after my interlocutor presented some opinions from a demographic researcher (who came to the same conclusions as myself, albeit from different premises)

With regards to small/medium sized companies vs. large (index
components), the determining factor in my view is the pure yen/$
exchange (small and medium companies that sell to the JPN consumer vs.
the larger index components who are hedged to a certain extent by
revenue streams in multiple currencies. But your friend is
right...smaller countries are a purer play (with more concentrated
Delta risk on the Yen)

With regards to demographics in general, it is challenging to
extricate short-term causations (changes in immigration policy, etc.)
vs. long-term trends. Also, property rights and the rule of law serve
as the mechanism that unlocks favorable demographics. Luxembourg, for
example, has terrible demographics upon first glance...but it is the
"new" Switzerland (although not for long as the Swiss don't want to
ruin their franchise with ****'s oft-labelled "weaponization of the

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