investments and the Japan earthquake

I would wait until the nuclear situation is more stable. The Nikkei 225 stopped on my feed at 8390, down 1000. Guess it was the end of trading, but odd round number -1000. This from about 10600 before the quake, so a loss of about 21%, and I doubt it is over until the all clear from the nuclear plants.

During that time, Gold dropped About $4 and silver about $.22, and 10 year US T note gained close to 1%. Interesting !

Jim

 

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Alex took a lot of heat here but his question was a good one. Don't think you'll find him on a Japanese street corner hawking water bottles; he's into coins not groceries. In fact, the free market is a great thing matching need with supply. In the present situation you might see people pour a lot of money into a company like Generac (they make all sizes of generators). This benefits Japan because it forms capital in a company that is meeting the demand of some very desperate people. Without the capital flow companies might be limited in the degree to which they can respond. BTW, I have not even looked at Generac or have any idea if they will be involved at all in Japan, just mentioned them here to illustrate a point.

Regards,

Bluesboy65

 

A solar panel has little chance of melting down, and if it does, doesn't pose a serious health or environmental risk. Nor does a solar panel explode. Nor does it give people black lung disease. It also doesn't cause flames to shoot out someone's faucet. Nor the removal of an entire mountain top. They also don't cause hundreds of thousands of crude to be leaked into our oceans and appear on our shores. They also don't require the maintaining of retention walls that house noxious substances like toxic ash.

Do you think it's time we got more serious about green technologies?

P.S. With all the talk about not leaving debts for our grandchildren to pay for......how about also leaving them a source of energy that won't require them spending billions of dollars to clean up after our poor decision making by trying to be cheap now. The only difference between spending the money now, vs later is a benefit to health and long term sustainability to the environment. As things stand, if Japan has a real melt down, they will need to concrete the area and declare it uninhabitable for over 30 years. This can't be cheap by anyone's standards vs putting in green technology now.

 

I think natural gas prices will rise. Liquified natural gas could solve Japans impending energy problem (could solve ours too) without all the problems related to oil (oil spills & supporting insane terrorist arab/muslim countries that hate the west) and nuclear (radiation). Yes, i also agree with the above posts that solar stocks will rise.

 

Large investors in all things Uranium are probably sweating it out. I expect the anticipated boom in building new nuclear plants might be on hold for a while as a new generation learns these things are not really green and carry some very significant dangers.

 

how many nuclear power plants do we have built on top of major fault lines (in the western US) ... that's a ticking time bomb too

and with the prevailing westerly winds ... if there is an accident ... the radiation cloud will spread over the entire US

 

In balance, the nuclear plant is 40 years old, and has provided service with little danger until a natural event well above design specifications caused events which would require serious intervention. Compare what has occurred so far with what could have been 40 years of pollution and expense if it was petroleum or gas fueled. I am all for solar or wind, but so far they have been far too expensive and unreliable, also must be replaced, and storage batteries are not sufficient in extreme hot or cold environment. Humans, I feel will be increasing their demands for power, and with their possible danger I think Nuclear will still be the method of choice. Don't get me wrong, public opinion of course will be against any other nuclear plants, throwing money at the "green" methods, only to find their only other real alternative is still petroleum/gas based. I think the green stocks at the moment are for the impulse buyers. IMO.

Jim

 

I agree with Desertgem. You are talking about Japan, which is in somewhat higher latitudes versus other Asian countries. How good is solar cells in the winter when they have most of their energy demands? How much good are windmills if its still? Alternative energy sources will always be sporadic offshoots of main power grids. The backbone of a power grid must be something that will produce power regardless of weather conditions. You cannot tell citizens that "well, it would be nice if it wasn't overcast and not windy, because we sure would like to give you energy to keep your houses warm, but it just sucsk being you I guess".

 

PM's are going to drop a LOT ! The reason is there is significant selling just to cover margin calls of stocks plummeting on the Tokyo exchange. I am planning to restock the silver I sold not long ago on eBay and prepare for the following run back to the $36 level. Am also considering gold, if the price drops enough.

gary

 

I wonder just how much liability the insurance companies will have. I mean I believe most of the damage falls under "Acts of God" and may not be covered. That means, US taxpayers will foot the bill for the majority of the reconstruction. IMHO

 

Some observations:

People in Japan will be liquidating assets in order to generate cash. That will have a depressive effect on the prices of virtually all stocks and commodities, including gold and silver. That effect should be of very brief duration.

A disaster in a poor country has different long-term effects than a disaster in a rich country. In a poor country, a disaster can cause more-or-less permanent damage to the infrastructure and economy. Think: Haiti.

In a rich country, there is short-term economic damage followed by a sharp increase in economic activity, as government and insurers pour money into relief and rebuilding. That's the situation Japan is in.

It is not "immoral" to adjust your investments based on new information, be that information good news or bad news for others. To Thine Own Self Be True, and make a donation to the people affected if you're feeling guilty.

Using fossil fuels to produce energy is far more damaging to the environment per unit produced than nuclear power is, has been or will ever be. As loathsome as the poisonous cloud from Chernobyl was, it had no major impact on the world beyond a few hundred square miles. Fossil fuels cause worldwide pollution and worldwide climate change. A combined approach to alternative energy production that emphasized both nuclear and "green" technologies could easily end this country's dependence on foreign oil a generation, making the world cleaner and our foreign policy free from the need to placate oil exporters.

Now get out there and play well with others.

 

If the prices stay as low as they are today by the weekend I might pick up my first gold bullion. But I will probably binge and get a ton of silver

 

Well thank the 100s of thousands of heroic workers for this who prevented what could have been a much much worse disaster. This was only managed by the Soviet system's ability to directly conscript involuntarily over 1/2 million cleanup workers which helped to prevent the disaster from being much worse than it was. Thousandss of these people died from radiation poisoning (the initial response team was vomiting within a few hours), and many others had issues with cancers and other ailments over the years. It's hard to imagine that such a response would be possible in the west because 1. people working for a private power company can quit, and 2. I doubt that many would go into a nuclear plant if they knew the danger. The Soviets had no issue with these sort of tactics.

Chernobyl was huge even though many Americans don't understand what went on there. It will be an issue for 1000s of years and to make matters worse, the concrete covering that was poured over it is falling apart and the issue may very well come back. The big issue is who is responsible to pay to fix it now.

A few years ago, someone took a motorbike tour of the area. It's interesting to see this retrospective.

http://www.kiddofspeed.com/

 

Okay...let's look at the difference between speculating, trading, and investing. These are different things.

Speculation is a bet with only assumed knowledge. (I think a hurricane will take out east coast power plant this summer, so I will buy energy futures)

Trading is executing transactions based on a specific event that the trader believes will have impact in the immediate / short term. (I think the quarterly announcement will be good enough to generate market upside)

Investing is executing transactions based on longer term metrics and foundations that indicate performance will be good in the medium / long term. (I think this company is doing all the right things and will succeed in the coming years)

So for the current situation....high end speculation had to be done before the earthquake, tsunamis, and nuclear disaster...we will skip this.

Investors will look at the nuclear disaster and believe there could be a longer term play in other energy fields. Or they will look at the earthquake and find companies that will help with early detection, better designs that withstand the shake, etc. Or they will look at companies that can help with Tsunami preparedness.

Looking at the "what will perform in the immediate/short run based on the events in Japan" is trading. Let's not confuse this with Investing.

Throughout the thread there are comments that explain the speculators already made the big money (correct)...but so did the person who walked into the casino and dropped a large sum of money on 17 black, it hit, they let it ride, it hit again....it does happen, but it is more luck than anything else...especially since this is an act of God.

There are comments around companies that have better "contingency" based products like solar. This is an investors perspective.

The activities in Japan did not impact the gold or silver or other precious metals supply side. So the trading question is, will this event create more demand for precious metals or less...in the immediate / short term. In the medium / long term (investor perspective), the events in Japan do not have an impact on precious metals.

Market volatility in today's economic world is driven by speculators/traders believing they are investors. The large drop in the Japanese stock market...has some investor rationale, but it is greatly exagerated by the speculators and traders who run from the event before all the facts are known about the impact to companies. The U.S. stock market drop has less investor rationale, and it is even more exagerated by the speculators and traders.

Current changes in the stock market, since they appear to be driven by over reaction/speculation/trading....is creating a market dip, not sustained downside. Given the old saying about the key to investing "buy low and sell high".....these temporary dips are the time to invest in solid investment plays....speculation and trading at this point where the markets are still "guessing" on the impacts of the events, well they are speculation and trading...not investing.

 

You're right, I didn't mention the human toll, and I should have. The mining, refining, transporting and use of fossil fuels kills thousands and sickens millions every year, too.

Interestingly, the exclusion zone around Chernobyl has become a nature preserve of sorts, with examples of native European fauna seldom seen in the wild elsewhere.

 

It has and now would be a great time to invest in companies. They said it was down 600 billion on NPR this morning

 

I would modify your definitions a bit. Speculation relies on changes in market prices [long or short term] to produce investment profits. Investment relies on the performance of the underlying asset in terms of earnings, dividends, interest, etc... to produce investment profits.

 

Anything you buy with the intention (hope) of selling for a profit is an investment.

 

Yes it does sound sick when you put that kind of spin on it but that's the way the cookie crumbles and there's always gonna be someone else there to pick up the crumbs. I really hate thinking that I hold something and if chaos and insecurity happens in the US then my holdings with be worth a little more but that's the way it works. Sick for certain, but I've always been a little sick in the first place so it kinda goes with the territory. :yes:

 

Chernobyl is always mentioned as the most severe of nuclear plant failure. But they are even giving tours:
http://wikitravel.org/en/Chernobyl

And the actual number of fatalities is debatable as the numbers range from less than a 100 to several thousand. The initial workers had the largest number of fatalities, but although the expected number of long term effects were dramatic, these were not produced. There were initial reports of 1000s of case of Lymphoma which were then expected to end in dead, but it is reported that 95% recovered. Now no one can say exactly how many had their lives reduced, as most likely many did, but since that was 30 years ago, it is hard to prove. I would be willing to say that tobacco products have killed 100 or 1000X of people than nuclear power accidents ever would. Radiation is just more scary to most than second hand smoke. IMO.

Jim