"Is the incredible bungling of the Japanese going to sink all our boats?" International investment manager Ted Tyson begins his July newsletter "The View From the Mast" with this question, accompanied by an apology to his followers.
"For those of you who took my advice last summer to bet your houses that the Japanese Nikkei index would outperform the S&P 500 over the next 12 months and are now sleeping on the pavement, I offer my sincere and humble apologies," wrote Mr. Tyson, the founder of Mastholm Asset Management LLC, Bellevue, Wash.
However, the Japanese financial system could be refloated with a few well-placed tax incentives, he said. "The key is to mobilize the greatest asset pool in the world -- the private household savings of the Japanese population. A way has to be found to move money from passbook savings into the property and equity markets."
The Tokyo stock exchange dividend yield is already higher than the government 10-year bond yield; if a change in tax laws did no more than force the two into yield parity, the Nikkei could easily rise 45% from current levels, he said.
"I'm going to double down my bet from 12 months ago and recommend a bullish stance on the Nikkei vs. the S&P 500. But this time I'm not betting my house. People who bet on rapid, logical change in Japan, like myself, aren't getting any wiser or richer. We've only been getting older -- much older."