In today's Exponential Investor...- From the Masters to Matsuyama
- Years of compound cultural understanding
- Going the extra mile, in more ways than one
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In my pursuit of all things green, I myself still hope to be a Masters champion one day.
I don't believe any mediocre golfer has successfully pivoted from investment to golf after the age of 25, so I'd be the first ever, which is exciting.
Watching Hideki Matsuyama become the first Japanese man to win the greatest golf tournament in the world on Sunday, it kindled many thoughts.
Coinciding with the death of Prince Philip, it was a weekend where we were reminded of the power of tradition and history.
The Royal Family and the Masters both carry a very strong sense of impenetrability. Ceremonial perfection, ritual and tradition.
I wonder how Matsuyama felt, walking up the 18th fairway to the sound of whooping and hollering white Americans in coloured polo shirts. I thought about how strange all these things must seem to him.
I tried to imagine what the reverse would be like.
If the greatest tournament on Earth were played in Ehime Prefecture, Japan. This is where Matsuyama grew up, in the ancient castle town of...
Matsuyama, believe it or not.
(Another famous Japanese sporting champion springs to mind – Naomi Osaka also hails from the town whose name she bears.)
Famous cherry blossoms would be a hallmark of the historic Japanese course. Dominated by Asian players and conducted all in Japanese, with funny traditions, unprecedented levels of bowing, oddly clothed caddies, and very few English speakers, it would seem a baffling and overwhelming place.
This is the challenge that faces Western investors looking at Japan now.
Why wouldn't you. Their companies have some of the strongest balance sheets, and the lowest valuations, even though its bull run since 2012 is surpassed only by the Americans'.
The last ten years have seen the world fall in love with the country. From the football fans cleaning the stadium up after their World Cup games, to the global takeover of Japanese food.
This summer Japan will host the Olympics, and there's hope for gold medals in golf and women's tennis, two major sports, among many others.
Japan is beginning to assert itself as a technological champion again, its companies are beginning to deploy their huge piles of accumulated capital, and recent reforms have made Japan more agile, growth focused and shareholder friendly.
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However, in the same way that Matsuyama may have felt overwhelmed by the alien nature of his surroundings, how should an investor approach Japanese equities?
It's not easy. The cultural barriers to entry are quite high. The economy has different aims, structures and incentives. The central bank is full throttle, the politics quite reserved.
Many people who go there fall in love with the sense of other. Those who spend decades there still write of the nuance and complexity which they will never truly comprehend. I myself delighted in the finely poised balance between innovation and tradition.
But the language and cultural barriers to investors are quite high.
Investors tend to prefer home comforts. We know what trainers people wear, where they shop and eat, what services they use. We would struggle to have even a basic sense of Japanese diets, fashion, tech, habits and trends.
Especially in a country so governed by ritual and tradition, just like those at Augusta, penetrating what is truly going on can be especially difficult.
Like Matsuyama at Augusta, it may not be an easy venture. But the rewards, over time, could be phenomenal.
He may have been the "low amateur" in his first year back in 2011, but it took a full ten years to become a Masters Champion.
Investors have had a similar journey.
In that time, the Nikkei 225 Index of Japanese stocks went from zero to hero:
And with Japanese culture spreading excitably over the globe, their sportsmen and women winning on the biggest stages, and an Olympics coming up, investors should be starting to include Japan in their thinking.
From technological veterans like Sony to Barcelona FC sponsors Rakuten (
Japanazon), there are opportunities aplenty.
I know little about Rakuten, but a recent bit of reading revealed the importance of cultural understanding for those operating in Japan. Rakuten equals Amazon's 20% share of e-commerce in Japan.
According to marketing firm WPIC:
Rakuten's level of control and personalization allows for a more intimate shopping experience than other platforms. This goes a step further, as a major selling feature for customers of Rakuten takes the form of a loyalty-based membership program that offers perks like Rakuten Super Points and cash-back offers.
But Rakuten's focus on building personal relationships with consumers taps into something much deeper than the instant gratification of earning cash just for shopping – Japanese expectations with respect to customer service greatly surpass those of most Westerners.
Children in Japan are raised with reverence vis-a-vis the notion of Omotenashi, which promotes deference and putting oneself at the service of another. Omotenashi therefore engenders a presumption of personalized customer service that Rakuten's platform provides in ways that Amazon's, perhaps, does not.
This is classic Japan. If you go to a ¥100 store (pound shop), you're buying the cheapest stuff out there. But the cashier will still bow and pass you your item rested on both palms, as if it's an ancient
Katana (samurai sword).
At Augusta, it takes years to understand the nuance of the course. The breaks on the green. The best strategies for each hole. When you should take risks, and when to play safe.
These same nuances take time to build up, but they pay great dividends in the long run.
For investors in Japan, understanding these cultural nuances could be a helpful advantage.
Like Matsuyama's charming interviews on Sunday night, conducted through a translator, we Brits are generally blocked from an easy understanding of the Japanese stock market.
But, with time and patience, and some of that Japanese dedication to a long-term goal, it could be a phenomenal place to be in an otherwise highly valued world market.
Quality at great prices.
All the best,
Kit Winder
Editor, Southbank Investment Research
PS My football team just signed a sponsorship deal that will see performance bonuses paid in bitcoin! Come On You Saints – that's class.
But if only they'd done this back in 2012, when Sam Volkering was first getting interested in this fascinating new digital asset... We'd be outbidding everyone in the summer transfer market, that's for sure.
Nine years on, and I believe Sam is still far ahead of anyone else when it comes to the emerging trends in the cryptocurrency and digital asset space.
Crypto, like Japan, could be a great way to diversify your investments, and that's why I think you should all
sign up to Sam's talk at 2pm today. In a free event, he's sharing his latest insights and forecasts for bitcoin and more.
You can
sign up here.
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