Highlights in this issue:

*** Are you listening to all the hype? Don’t…
*** The real reason why Japan will bounce back into favour…
*** A simple way to play the “trend of the Rising Sun”…

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From the pen of Karin Iten…

Dear Investment Academy Reader,

For all the bold talk about “change” around the globe, the path back to prosperity continues to be slow. Will higher GDP growth over the past couple of quarters translates to more jobs? Will the housing market mount a meaningful recovery? Will governments around the globe be able to strike a balance between aiding the economic recovery and staving off inflation?

Time will tell. One country that can certainly sympathise with the current plight is Japan. Mired in an often savage economic vortex for around 20 years, the country is finally beginning to haul itself back. Yet from an investment standpoint, it remains unloved.

Unloved and also undervalued. And as my colleague (and well respected international investment expert) Alexander Green explains below, this could be an excellent time to buy while the masses ignore the opportunity to get in early on the budding recovery. He outlines the reasons why Japan is bouncing back - and gives you a way to take advantage of it.

Here’s to your financial freedom,

Karin Iten
For the Investment Academy

How to know what to buy... And what to sell

Here’s a handy way to know what investments to sell: Everyone is talking about them.

Consider recent history...

*** Tech Stocks: When everyone was yakking about Internet and technology stocks ten years ago – and describing the glorious future just ahead - it was the beginning of the end.

Of course, the real end didn’t come until the Nasdaq lost three-quarters of its value and the leading index of Internet stocks dropped 90%.

*** Real Estate: A few years later, investors began rhapsodising about the limitless potential in residential real estate. Investors who should have known better started declaring that you should buy all the houses you can afford (and then some). Flipping lots and apartments was “a no-brainer”.

“They're not making any more land,” I kept hearing at the time. That was true since the oceans last receded during the late Cretaceous period, of course. But no one thought it was worth mentioning until home prices more than doubled in the space of a few years.

There’s an obvious corollary to knowing what to sell. If you want to know what to buy, consider what no one is talking about.

And that brings me to Japan...

Japan: Land of the Rising Sun... and stock market

From a high near 40,000 in 1989, the once-mighty Nikkei 225 – the Japanese equivalent of the S&P 500 - fell over 80% and hit a 27 year low early last year. It’s still more than 70% below the highs of 21 years ago.

The main culprit - aside from a real estate bubble that made the one in the United States look bush-league - was misguided government policies. Japan waited too long to clean up its ailing banking system and spent trillions on public works projects that simply weren't needed.

However, Japan has a new government that’s promised to shrink the country’s massive bureaucracy and cut wasteful public spending. It also intends to end more than 20 years of economic stagnation by cutting taxes and focusing on small- and mid-sized businesses.

Japanese stocks have rallied off the lows of ten months ago. In fact, the Tokyo Exchange is one of the world's best-performing bourses so far in 2010.

But it’s still among the cheapest and most unloved in the world. Virtually no one is enthusiastic about Japanese stocks.

And that's excellent news...

A great way to invest in Japan’s revival

Great opportunities are born when dirt-cheap valuations are married to investor disgust or apathy. And there are a number of good reasons to put money to work in Japan right now...

*** A new political and economic philosophy: Just as Ronald Reagan's free-market policies ignited one of the great bull markets of the twentieth century, Japan stands at the threshold of a new era.

*** Consumer cash: Japanese consumers and investors are flush with cash. Having largely ignored domestic stocks after years of sub-par returns, the Tokyo market should lift off as that money begins to find its way out of mattresses and back into Japanese equities.

*** Institutional involvement: For years, global fund managers have outperformed the world benchmark simply by underweighting Japan. But if the bullet train takes off without them, they’ll be forced to dash after it.

If you’re looking for a quick way to gain access to this market, consider this Exchange Traded Fund (ETF)…

*** DBXJapan (JSE:DBXJP): Through it, you’ll be able to gain exposure to 400 of Japan’s best large-cap stocks.

This ETF offers exceptional upside potential in the months ahead. And then, of course, investors will start talking about them.

Good investing,

Alexander Green