Perspectives on the Japan Earthquake

Charles Sizemore, Editor of the Sizemore Investment Letter, gave his analysis of the developing crisis in Japan to Reuters following the earthquake and tsunami and offered his suggestions of how investors can profit from an improvement in sentiment.

BOSTON, March 15 (Reuters) – Japan’s stock market, usually one of the world’s dullest, has turned into a gripping 24-hour roller coaster fueled by fear and punctuated by only short moments of relief.

The U.S.-listed iShares MSCI Japan Index exchange-traded fund (EWJ) turned over 400 million shares worth some $4 billion on Tuesday, more than 10 times the fund’s average volume over the prior three months. Another 37 million shares traded in the first hour on Wednesday on the New York Stock Exchange.

Why would anyone want to trade amid such uncertainty?

“American investors wanting a short-term play on a Japanese recovery can consider (the fund),” Charles Sizemore, who runs Dallas money manager Sizemore Capital Management, said. While not advocating a long-term bet on Japan, “in the short to medium term, I like Japan as a contrarian value play. Natural disasters tend to have only very short-term effects on the stock market,” Sizemore added.
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Charles Sizemore in the Media

Charles Sizemore was quoted in the recent Reuters article on exotic ETFs: “Investors develop taste for exotic, far-flung ETFs


But some investors criticized the combination of countries in the First Trust fund resulting in its memorable acronym. “BICK” was a twist on the “BRIC” theme popular last year, swapping South Korea in for Russia.

“The popularity of this would seem to have more to do with the catchy name than with the underlying rationale,” said Charles Sizemore, who runs Sizemore Capital Management in Dallas. “Why Korea and not South Africa? Is ‘BICSA’ not marketable?”