The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.NEW YORK ( TheStreet) -- After a long, long, long wait -- 20 years, in fact -- I took the dive into the pool that is Japan on Monday and bought a well-diversified basket of Japanese stocks. And guess what? The water's warm! I encourage you to dive in as well. But Alan, you say, look at the massive amount of devastation that the earthquake and tsunami have wreaked upon Japan. How on earth can a country get back on its feet from such a catastrophic turn of events? Well, it won't entirely do so -- at least not immediately. To be clear, the loss of human life is economically and psychologically immeasurable, and our deepest sympathies go out to all those affected by this calamity. That said, Japan's citizens ultimately have no choice but to pick up the pieces and rebuild. And therein lies the investment opportunity, as a spirited, determined and rejuvenated Japanese populace will strive to rebuild and improve upon what they have lost. This will be part of the necessary and healthy healing process by which Japan will once again rise. And lucky for you, you can even benefit from this pending reversal of fortune as the collective Japanese spirit once again rises. But Alan, you say, this is Japan, with too many retired, elderly citizens and not enough young workers to support the older generations in their retirement. What's more, this "demographic headwind" limits the ability of Japan to productively grow its economy. Besides, Japanese citizens have been oversaving for years, unwilling to spend their income, which means the economy can't grow quickly enough to generate the profits I expect companies to earn if I were to invest in their stocks. And don't get me started, you say, on how brutally overleveraged the Japanese government is. Can you say debt-to-GDP ratio of 220%, which makes America's members of congress look like a bunch of Calvinists. Last I checked, Alan, the nuclear problems will put into question Japan's strategy for generating power cost effectively for its citizens and corporations, and Japan is a net importer of commodities in an environment where commodity prices may well be escalating. How could I possibly think about buying Japanese stocks now?
Think again. Did you know that institutional investor flows of funds into Japanese equities had been positive for the 16 consecutive weeks prior to the earthquake? We haven't seen that level of institutional investor demand for Japanese equities in more than a decade. What gives? What did these sophisticated institutional investors know before the earthquake occurred that triggered their sudden interest in Japan? The answer: They knew that Japan's corporate culture is on the cusp of becoming shareholder-friendly for the first time in more than 20 years. You see, Japan's corporate culture was at its height in the 1980s. And what did Japan's CEOs do with their clout and financial strength? What every ego-bloated CEO does at a time of supreme chest-pumping hubris: They borrowed excessive amounts of money and grossly overpaid for assets that crashed hard once things turned sour. Think Pebble Beach and Rockefeller Center. Not Japanese-owned anymore! After taking a nasty fall from their heights, Japanese CEOs spent all of the 1990s and 2000s paying down their debts in full and building up massive amounts of cash on their companies' balance sheets, still fearful of wastefully spending their corporate cash. That was then, of course, and this is now. Today, the average Japanese public corporation has 29% of its assets in cash! Just imagine if some of those firms began to increase dividend payouts to shareholders or to institute share buybacks. What's that, Alan? A few prominent Japanese firms have already begun to do so? Yes, that's right. KDDI (KDDIY.PK) announced a share buyback roughly six months ago. Canon ( CAJ) announced a share buyback a few weeks ago. And Rohm bought back shares last month and again earlier this month. Other firms such as Olympus (OCPNY.PK) have begun to raise their dividends over the past two years. Hmm, maybe there are the beginnings of a trend here. But wait, there's more. You might think that the U.S. equity market is attractively valued at 2.4 times its book value, or you might expect that Europe (with its government debt problems) is more attractively priced at 1.7 times its book value. Any idea how excessively cheap Japan has become? How about a bottom-feeding 1.2 times book value. They're practically giving the country away!
Look, I'm not trying to downplay the unfathomable losses that have already transpired in Japan. Nor am I trying to sugarcoat some the deep structural problems (high levels of government debt, chronic oversaving, import dependency) that have persisted in Japan for years. Rather, I want to let you know that Japan's two-decade refusal to effectively acknowledge shareholder rights led to a methodical, slow-draining of capital out of its equity markets. And now, after 20 long years, the tide is about to turn for the better. Ironically, a long-time investor in Japanese equities might conclude that the earthquake, tsunami and threat of a nuclear meltdown are collectively the straw that has broken the back of Japan. I beg to differ. These tragic circumstances are actually the seminal event that will trigger the steps leading to a rekindling of Japanese spirit, productivity and profits for those willing to bet on the Land of the Rising Sun.