Nikkei, Ford , the US long bond and Mr. A Wiggen of Agora fame.

The other day I happened to see Mr. Wiggen on TV. Every 10 years he sticks his neck out to predict what will be the next 10 years best investment. Last time it was long gold/short the Dow Jones – which proved to be a very good trade. This year his best choice is long the Nikkei, short the US Government long bond. The guys at Agora are fiercely independent and even if they can be accused of all sorts of things like sensationalism they are definitely out-of-the-box thinkers. This 10-year call resonated well with me so here it is revisited.

Nikkei 225 Jan 2010 F Jan 2010 3

 F Jan 2010 2

St louis fed jan 2010 long bond

I put Ford in simple because it had recently completed a pattern known as a “diagonal” or an expanding wedge. It takes stocks down ( or up, as the case may be) beyond an extreme value and therefore leads to a rather violent reversal once complete. Japans Nikkei may be close to a low but the pattern is not complete and consequently, even though I agree with Mr. Wiggen over 10 years, I do think we should go a few thousand points lower first.

Note that the 30-year bond chart is similar to the Nikkei chart, however, its down trend lasted 30 years or so whereas the Nikkei has only been at it for 20, ergo a few more years and a little lower is certainly not out of the question.