Investing Strategy / Suggestion during such weak JPY times

[tofusoba14]

Hello eveyone,

Today I have a question about investing in stocks given the current situation ( war, inflation )

As you all are aware, the market is quite uncertain since 2022. I started investing since mid-2021. Just 2-3 weeks ago during the correction, I was running -5% or more on my overall returns. But because the yen got weaker and market recovered, now it’s looking good


So during such uncertainty and the JPY being so weak than before, is it a right time to invest in US stocks ? Or for the time being should I invest in JP domestic stocks and go back on US once the Yen is strong enough?

Since I’m quite new, just wanted to know what everyone have done in the past when the yen was at such lows.

[RetireJapan]

Just keep doing whatever you were doing (hopefully buying low cost index funds). You can't control or predict the exchange rate, so don't worry about it.

[Tkydon]

Or buy Japanese Mutual Funds while the Yen is weak, and switch the funds over to International Mutual Funds when the Yen strengthens again.

The USDJPY moved over a very wide range in the last 13 years, since the Global Financial Crisis

https://finance.yahoo.com/quote/USDJPY% ... t?p=USDJPY

At the height of the Flight to Safety, the Yen topped out at 76 Yen to the Dollar at the end of October 2011.
At the height of the unwinding of the Flight to Safety, the yen dropped to 125.5 Yen to the Dollar at the beginning of June 2015.

I think there will again be a Flight to Safety to the Yen.

Therefore, I define brackets of the USDJPY as follows - All else being equal:

Very Strong - 0-25 Percentile - 76 to 88 - Buy Only Overseas Assets
Strong - 25-50 Percentile - 88 to 101 - Buy Mostly Overseas Assets
Neutral to Weak - 50-75 Percentile - 101 to 113 - Buy Relatively More Overseas Assets
Relatively Weak - 75-90 Percentile - 113 to 120 - Buy Relatively More Domestic Assets
Very Weak - Bottom 90-100 Percentile - 120 to 125 - Buy Only Domestic Assets

[beanhead]

If you are investing for the long-term, for retirement or something else in the distant future (house purchase, college for kids?) :

- make a plan
- stick to the plan
- try to ignore the noise as much as possible

Exchange rates, in my opinion, are definitely noise...

[adamu]

I started investing since mid-2021.

You cannot consistently predict the future based on past/current events.

The best you can do as a layperson is stick to rational rules, and do it for a long time, hoping that it will pay off. The odds are that it will, and if it doesn't, then you will have bigger problems to worry about than your portfolio crashing.

There is some luck involved in when you start/finish - but that is out of your control, so better just to stay they course.

[TJKansai]

Or buy Japanese Mutual Funds while the Yen is weak, and switch the funds over to International Mutual Funds when the Yen strengthens again.

The USDJPY moved over a very wide range in the last 13 years, since the Global Financial Crisis

https://finance.yahoo.com/quote/USDJPY% ... t?p=USDJPY

At the height of the Flight to Safety, the Yen topped out at 76 Yen to the Dollar at the end of October 2011.
At the height of the unwinding of the Flight to Safety, the yen dropped to 125.5 Yen to the Dollar at the beginning of June 2015.

I think there will again be a Flight to Safety to the Yen.

Therefore, I define brackets of the USDJPY as follows - All else being equal:

Very Strong - 0-25 Percentile - 76 to 88 - Buy Only Overseas Assets
Strong - 25-50 Percentile - 88 to 101 - Buy Mostly Overseas Assets
Neutral to Weak - 50-75 Percentile - 101 to 113 - Buy Relatively More Overseas Assets
Relatively Weak - 75-90 Percentile - 113 to 120 - Buy Relatively More Domestic Assets
Very Weak - Bottom 90-100 Percentile - 120 to 125 - Buy Only Domestic Assets

I am with you on those numbers. I think my domestic preference is closer to 110 and up.

I will definitely use US credit cards in Japan more if over 120.

From the Japan Times. 116-150 is a pretty big spread.
Societe Generale SA strategist Albert Edwards reckons the unraveling of Japan’s currency has the potential to take it to around ¥150 “as traders get the bit between their teeth.” That’s a level unseen since the last century, some 18% below the ¥122.42 per dollar the yen reached at one point on Friday.
A depreciation to the 150 per dollar mark isn’t out of the question, Edwards said. The strategist — known for bold and often bearish views on economies and markets — has suggested the yen could hit that level before, when it went through another period of weakness in 2014, but the currency bottomed just under 126 per dollar the following year.

Analysts surveyed by Bloomberg expect the yen to finish this year higher — at 116 per dollar.

[TJKansai]

There is one more thing to do with yen when it is weak. Spend it!
Bad investing advice of course, LOL, but the weak yen and planned expenditures on an EV car, solar panels and uni tuition all are reasons I am sitting on cash.

[MBK]

My first post, but have been keeping an eye on Retire Japan for a while and I have to only echo everybody`s sentiments that it`s truly a remarkable source of information. Thank you to everyone for keeping it full of useful resources. 

I have a question connected to the main topic.
Until now, me and my wife have pretty much kept our savings in the bank as well as number of insurances, though I have finally ready to make the money move and are considering investments.

I have just opened my iDeco account, but also want to invest a lump sum of money (several million JPY). Reading through number of books, index funds seem to be the way to go since I`m planning to invest long term.

My question is how does the current weak JPY affect this potential investment? If I`m looking to invest in index fund is it preferable to wait a while until the currency stabilizes again or with index it does not really matter?

Alternatively, do not mean to hijack the topic, but if there are any other possible investment options I shall be looking at with lump sum investment, I would be interested to hear those too. 

[beanhead]

My question is how does the current weak JPY affect this potential investment? If I`m looking to invest in index fund is it preferable to wait a while until the currency stabilizes again or with index it does not really matter?

Alternatively, do not mean to hijack the topic, but if there are any other possible investment options I shall be looking at with lump sum investment, I would be interested to hear those too. 

Investing in index funds is a very sensible idea. The funds available in Japan are priced in Japanese yen. Since the assets being purchased are not in yen, you are right to be concerned that you may be purchasing at an 'expensive' time. Your weak yen buys you less of an All-Country fund or an S&P500 fund than it did 12 months ago, for example. If you are worried about this, consider dividing your lump sum into a few chunks, and investing it gradually over the course of a few months.
There is a potential opportunity cost of doing this, however. All the time your money is not invested, you are potentially missing out on the gains if the market grows.

The other asset class to look into with a lump sum is real estate. This is much closer to starting a small business than passive, index fund investing.
Ziv's company, link below, is a good place to go to start your research if this interests you.

https://nippontradings.com

[Tkydon]

Buy Japanese assets in JPY. Do not buy Overseas assets at this time, whether denominated in JPY or foreign currency.

If you buy something, for say UD$100 at Y128 yen to the US$, then you will get one unit for Y12,800

If the Yen goes back to Y110, with no change in the unit price, the that one unit is now worth only 11,000.

That is a loss of 14%

The underlying asset would have to rise by 16.4% just to break even.

Given the current situation with Quantitive Tightening, Fed Interest Rate Hikes, the War and Covid, etc., this is highly unlikely.

Wait until the Yen is stronger and the Foreign Market is down...