Global markets are reeling after the world's third-largest
economy was hit by an earthquake, flooded by a subsequent
tsunami, and now faces the threat of nuclear radiation. And until
the nuclear reactors are under control and the recovery efforts
kick into gear, the market will remain volatile.
My heart goes out to the people of Japan. The massive
earthquake and tsunami have caused significant damage, and it's
likely that we will see the death toll rise in the coming days.
As we watch the news coverage, I have no doubt that we will see
the hard-working people of the
on the ground, and if you're looking for a way to help the people
of Japan and around the world, this is a solid organization that
would appreciate your donation if you are so inclined.
Near term, the flooded farmlands in Japan will exacerbate food
shortages, plus there will be a shortage of key goods due to
extensive factory and infrastructure damage. The Bank of Japan
will almost certainly provide a massive amount of financial aid
and help boost Japan's rebuilding efforts. The Bank of Japan
initially injected $183.17 billion of fresh liquidity to help
stimulate repair efforts and made $265 billion available to
financial institutions to help stimulate the repair efforts. More
stimulus money will likely be forthcoming, since the damage was
so extensive, especially to many nuclear power plants, which
obviously cost billions of dollars each.
This aid will likely help to dramatically boost Japan's GDP
growth long term because of the massive construction that will be
required to repair infrastructure. In the interim, Japan's GDP
(the world's third largest) will take a hit near term, since the
earthquake caused massive damage and will disrupt Japan's
substantial exports, but all eyes will be on the country's
rebuilding efforts for communities and production facilities.
The electronics manufacturers in Japan, especially of
semiconductors, are predominately located in southern Japan,
which was far from the earthquake in northern Japan. However,
supply disruptions may force other plants to close.
One of the major Japanese companies that are impacted by the
earthquake and tsunami include car and motorcycle manufacturer
Honda Motor Co.
). Four out of their five production facilities are now closed
because of the devastation.
Nissan Motor Co.
), another of the major Japanese automakers, reports that all six
of its production facilities are now closed.
Toyota Motor Corp.
) appears to be the hardest hit right now with all 12 of their
production facilities closed.
) is a major consumer electronics company that makes everything
from televisions to batteries. It has been reported that some of
Panasonic's operations are offline, but the company was able to
donate "500,000 batteries, 10,000 flashlights and $3 million for
quake victims," and boost production at unaffected plants in
) is another very popular electronics company based in Japan, and
recent news shows that six production facilities are now
It is going to be a long road to recovery for Japan, and the
uncertainty surrounding the situation there will continue to
weigh on the market. The best defense in this type of a market is
a portfolio that is reinforced with fundamentally solid stock
picks. The volatility will shake the market, and investors will
seek safety. What they will flock to are companies with strong
earnings growth and strong forward guidance.
My advice to all investors like you right now is not to panic,
but to understand that the market has a lot of news to digest and
that it will be bumpy in the near term. Check all of your
holdings in my
Portfolio Grader tool
to make sure they have the fundamentals buyers are looking for