Time to Consider Japan?

With the risk of being one more sucker tempted to buy low before the great Japanese stock market comeback, I'm going to go out on a very shaky and lonely limb and say that now is a good -- nay, great -- time to invest in Japan.

No major stock market in the world is more perpetually beaten down. Current levels for Japan's Nikkei index are still down some 80% from highs reached more than a decade ago. The battered market trades at 20-year lows.

Contrarian investors, those who try to zig when others zag, have long been trying to make the case for Japan. Japan has all the hallmarks of the perfect contrarian play. Unfortunately, it's had them for years, sucking in investors one by one with the possibility that stocks are now officially cheap, or that the economy is improving, or that the government is finally getting its fiscal act together. There have been occasional spits and sputters and some massive rallies; all have crashed and carried the market to new lows.

Contrarian bets work best if two things happen: 1) Whatever is scaring the masses away vanishes; 2) the masses stop eschewing the area. Contrarian investing is sort of like value investing; it only gets exciting when your stock is discovered, runs up in price and stops being such a great value (like we've seen these last few years). Otherwise you just sit around collecting (yawn) dividends and talking about what a great bargain the stock you own is.

Reasons abound: low valuations, an economy showing signs of life such as reports of falling unemployment, a banking system on the road to recovery. But experts who know far more than I do have laid out sensible reasons in the past, only to be humiliated by an economy that just won't stop stinking.