By The Sizemore Letter<\/u><\/p>\n
\u201cTokyo 2020 Olympics could be shot in the arm for struggling Japan.\u201d \u201cThe successful 2020 Olympic bid signals new hope for Japan.\u201d So, that\u2019s all it took.\u00a0 Twenty years of economic stagnation and all Japan needed to get back on its feet was that the summer Olympics be hosted in its capital.\u00a0 And after two decades of secular bear market, Japanese stocks are a buy again.\u00a0 Such a shame no one thought of this sooner.<\/p>\n If you believe that, I recommend you close your brokerage account, withdraw the cash balance in a duffel bag, and then douse it in gasoline and set it on fire.\u00a0 Because if you believe Japan is investable, you\u2019re inevitably going to lose your money.\u00a0 We might as well just skip a few steps and go directly to the fiery duffel bag.<\/p>\n But aren\u2019t the Olympic Games good for the economy?<\/p>\n That\u2019s the received wisdom.\u00a0 But the evidence here is sketchy at best.<\/p>\n London hosted the 2012 Summer Olympics, and by the UK\u2019s own estimates<\/a>, ticket sales boosted British GDP by a whopping 0.2% in the third quarter of 2012. That\u2019s hardly worth mentioning.<\/p>\n Hotels and food and beverage services picked up a little during the quarter the Olympics were hosted.\u00a0 But the final analysis by the British government was that the overall impact was modest, and that consumption dollars spent on the Olympics might have simply \u201cdisplaced other activity.\u201d\u00a0 In other words, an Olympic ticket came at the expense of a movie ticket that might have otherwise been purchased.<\/p>\n But wasn\u2019t it good for employment?<\/p>\n Not really.\u00a0 Quoting the UK Office for National Statistics, \u201cEmployment agencies showed some strength in the quarter and it is possible that some of this strength was related to the Olympics. However, there was no direct evidence from survey respondents to support this.<\/b>\u201d<\/i><\/p>\n And hosting the Olympics isn\u2019t free.\u00a0 It cost the UK \u00a39 billion<\/a> to host the games, which amounted to \u00a3142 for every man, woman and child in the country.\u00a0\u00a0 (This is the part of the tab that the government picked up; private sponsors paid for quite a bit more.)<\/p>\n Of course, London\u2019s transportation and infrastructure were improved in preparation\u00a0 for the Games, and the UK will continue to reap the benefits of those improvements for years to come.\u00a0 That has value, even if it is hard to quantify.<\/p>\n But would this matter to Japan?<\/p>\n Absolutely not.<\/p>\n Japan expects to spend about $6 billion building, among other things, 11 new sporting venues<\/a> and 10 temporary ones.\u00a0 But Olympic expenses rarely come in under budget;\u00a0 Russia\u2019s 2014 Sochi Olympics are on track to cost $50 billion, and the 2012 London Olympics went over budget by nearly 400%.<\/p>\n And the last thing Japan needs is new infrastructure.\u00a0 At the risk of sounding alarmist, in another few decades there will be no Japanese left to use it.\u00a0 Japan\u2019s population shrunk by 200,000 people last year, and Japan is the oldest country in the world.\u00a0 A quarter of the population is over the age of 65\u2026and that number creeps up every year.<\/p>\n Hosting the Olympics provides the proverbial bread and circuses for the population, but it does nothing to address the country\u2019s long-term problems.\u00a0 With sovereign debts approaching 250% of GDP\u2014and with fewer Japanese taxpayers to service that debt every year\u2014Japan is heading towards a sovereign debt meltdown<\/a>.<\/p>\n Japan\u2019s domestic market is dying.\u00a0 Not even Japan\u2019s world-class multinationals see opportunity there today.\u00a0\u00a0 As a case in point, Suntory Beverage & Food<\/b> (<\/span>Japan:2587<\/a>)<\/span>, one of Japan\u2019s largest consumer staples companies, announced today that it would be buying the Lucozade and Ribena drink brands from\u00a0Britain\u2019s GlaxoSmithKline<\/b> (<\/span>GSK<\/a>)<\/span>\u00a0for $2.1 billion as a means of diversifying outside of Japan.<\/p>\n Suntory has been aggressively expanding outside of Japan, where the company already generates just shy of a third of its revenues.\u00a0 Expect this to continue, as it is the company\u2019s only outlet for growth.<\/p>\n So, with all of this said, are their pockets of opportunity based on the Olympics bid?\u00a0 Maybe.\u00a0 But I wouldn\u2019t get too attached, as the companies best positioned to profit have already seen their share prices jump.\u00a0 Taisei Corp, which built the stadium for the 1964 Olympics, saw its shares jump by 17% on hopes that it will be involved in the 2020 games.<\/p>\n The best course of action?\u00a0 Move on.\u00a0 Ignore the Olympic hype and seek your investment opportunities elsewhere.<\/p>\n This article first appeared on InvestorPlace<\/a>.<\/p>\n Charles Lewis Sizemore, CFA, is the editor of the\u00a0Sizemore Investment Letter<\/a>\u00a0and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he did not hold a position in any of the aforementioned securities.\u00a0Click here<\/a>\u00a0to learn about his top 5 global investing trends and get your copy of \u201cThe Top 5 Million Dollar Trends of 2013.\u201d<\/em><\/p>\n This article first appeared on Sizemore Insights as Japan Distracts Investors With Olympic Five-Ring Circus<\/a><\/p>\n
\n–NBC News<\/a><\/p>\n
\n–Time Magazine<\/a><\/p>\n