The earthquake and the subsequent tsunami in Japan are a tremendous disaster. Thousands of people have died and many more lost their loved ones.

My sympathy goes to all victims. There could be even a catastrophe now with the nuclear power plant. But in the financial world there is no such thing as sympathy. It is all about profit and panic.

On March 14, the first trading day after the earthquake, the Nikkei lost 6.2% in value. Today, the 15th, at the moment of writing, the Nikkei has lost another 14%, probably fueled by the news on the nuclear radiation leaks. In one-and-half day, the Nikkei has now thus lost almost 20% of its value.

Till the earthquake, all our long-term trend signals for the Japanese market were pointing “Up”. How does it look now after this 20% drop? I do not know and I do not care. Also now we’ll just evaluate our trend signals only once in the month. “What….!” You say. “There is such a disaster and you do not react?” Precisely!

The way I see it is that nobody can predict if one of the consequences of the earthquake is a change in the direction of the long-term trend of the Japanese stock market. Are people just panicking at this moment or has something fundamentally changed in the long run for the Japanese companies and market?

There are so many variables here. The Japanese debt as a percentage of GDP is already enormous and will only increase further because of the reconstruction investments. But all these investments and flooding the market with more liquidity could also end the deflationary period and spur more economic growth.

Do you know what will happen to the Japanese stock market in the coming 6 months? I don’t.

Not knowing what will happen, we stick to what we do know

Therefore we just keep investing as usual. End of March, we’ll review the long-term trend signals for the Nikkei. Personally I do not expect any of these trend signals to start pointing down now. But we’ll see.

If after all the panic, the markets recover and the long-term up-trend continues, it was wise as a long-term investor not to sell now during all the horror.

If for one reason or another, the earthquake changed the direction of the long-term trend, we will see that in the coming months. If that is the case, we sell at that moment and accept the losses we may have made on our investments in the Nikkei. These things happen and there is nothing you can do about it. As an investor, there are enough profits from riding other trends to offset events like this.

It just shows how important it is to diversify your investments of your savings over different regional markets. And you know that there is always another long-term trend in the Japanese or others markets that you can capitalize on.

If, how and why did the earthquake in Japan change your investments in and long-term outlook for the Japanese market? Please share your opinion.