In the chart below, the restraint of the Japanese yen on the Nikkei 225 is very evident. Based on my most likely scenario of higher inflation leading to appreciating Emerging Asian currencies as they abandon the US Dollar peg, Japanese exporters would benefit most greatly as their competitiveness improves dramatically. For your portfolio to benefit from that scenario, go long Japanese stocks, long emerging market currencies, long commodities, short bonds, and short Euro/Yen/US$ reserve currencies. It sure would be nice if there were a fund with all these exposures, but for now long ujpix, long eem, long tbt, and long dba/dbc should offer a reasonable substitute for the retail investor. Buy and hold might finally be a good strategy again with this combination.
As usual, my thoughts are simply that and should not be construed as investment advice. This suggestion could very easily lose money, and I might not notify you when it does, so you’re on your own. Best of luck.
Nikkei Relative to Dow Jones World Monthly Performance with Japanese Yen overlay
via StockCharts.com
1 hour
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