Today, I want to speak a little bit about Japan, as they have some of the same systemic problems Europe has, only worse. Namely, way too much debt to GDP. Japan is #2 in the world, only behind Zimbabwe. Their debt to GDP is 192%, a 2009 statistic and getting worse!

Additionally, they have an aging workforce that is shrinking. They have a very homogeneous society with very little immegration. Therefore, Japan will be hard pressed to replace its aging workforce. Therefore, their tax base will be getting smaller to service this debt.

Luckily, when it is the right time to invest in Asia, you can find ETFs that are "ex-Japan." Therefore, you can get exposure to Asia but exclude Japan. This is important especially if you are a "long term" investor and do not make many changes. There are also ETFs that specifically short Japan. Japan, the 2nd largest economy in the world but soon to be 3rd, in my opinion, is in the most trouble of any industrialized nation!

Enough about Japan, now back to Europe, As I stated over the past few days, Europe has some serious, serious problems. In fact, we are having an expert today from IBISWorld today on theWallStreetShuffle at 5:20 CST on the European debt crisis. I know this seems like beating a dead horse, but it is so important to your investments.

Do you know how much S&P earnings come from Europe? As we stated on the radio a few weeks ago, McDonald's 40%, GM 25%, Ford 32%, and DuPont 28% just to name a few. When you convert these Euro sales back into US dollars, you have a translation loss that reduces your profit due to the weak Euro.

Additionally, if they do their manufacturing in the US, witht the strong dollar, it makes their products even more expensive. This is why it is so important to know where the companies revenues and expenses come from and orginate from. This is why thinking global is so important. Even if you have just US stocks (normally a mistake, although currently smart due to the risk), they are very affected by factors outside our borders.

Food for thought. Oh, one last thing, this expert has IBISWorld's new quarterly updated Gold & Silver Ore Mining Report. If you would like a complimentary copy, e-mail me at dstewart@noramassetmanagement.com and I will send you a copy. These reports are ususally quite pricey.

Good studying,
Dan Stewart CFA®