Potential positive in Japan disaster

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When a natural disaster on the scale of what we saw in Japan occur, it is hard to see anything good. However, it is those times when looking for a light at the end of the tunnel becomes more important than usual. Japan will have a lot of cleaning up to do and no shortage of mourning amidst the destruction from the severe earthquake and tsunami. Oddly enough though, this rebuilding effort that Japan will need to undertake may provide a boost to their economy.

Japan’s economy has been up and down for well over a decade now and considered to be in a stagflation state or in a period of very slow growth. When a major disaster occurs in a country that is experiencing economic flatness, the rebuilding effort calls for new investments and purchases which spur demand and also business. In light of this, foreign investor’s (at least the smart ones) may look to buy Japanese companies’ stocks and other Japanese financial instruments.

You are seeing a lot of people moving away from Japanese stocks right now because of the fear and uncertainty regarding potential damage in the wake of this disaster. However, this sell off of Japanese equities is over exaggerated which gives people in and out of Japan an opportunity to buy various Japanese stocks at low prices.

For these two reasons, 1) the boost in spending the rebuilding will create and 2) the over selling of Japanese stocks creates a real opportunity for Japanese people to make some money and see some positive outcome from all this destruction. Japan is one of the most advanced economies and societies in the world and they will surely be able to rebuild and get back on their feet fairly quickly. A major earthquake and tsunami is not enough of a reason to avoid investing in a country like Japan. Hopefully this one positive outcome will make an otherwise difficult time a little easier for the Japanese people to cope with.