Japan and Middle East pose interesting contrasts to the investors. Yesterday I mused on the recent string of extraordinary events, one natural and the other man-made, that are shaking up these two regions, and causing ripple effects on US market.

One can see why investors are lapping up Japanese stocks, while they remain leery on Middle East. There has been encouraging words about Japan’s recovery from none other than Warren Buffett:

It will take some time to rebuild, but it will not change the economic future of Japan…Frequently, something out of the blue like this, an extraordinary event, really creates a buying opportunity. I have seen that happen in the United States, I have seen that happen around the world. I don’t think Japan will be an exception.

Natural disasters are not predictable, but human responses to them are, when a stable government is at the helm. And Japan is not the third largest economy for nothing. I agree with the investors that Japan’s massive rebuilding effort will spur rapid economic growth.

By contrast, although geopolitical turmoil in the Middle East could have been predicted, the outcome remains unknown, especially if it leads to regime change as in Egypt. No one knows how the new government would function. So it makes investing sense to tweak your foreign holding, at least for short term.

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