As reflected by the precipitous slide in the Nikkei Index, Japanese stocks have been out of favor for more than two decades. Following the disastrous earthquake of March 11, this has changed, however. In a cover story on March 19th issue, Barron’s prompted investors to buy Japanese stocks now, to take advantage of the country’s reconstruction boom, while a week later, mutual funds and ETFs investing in Japanese equities reported an $1.5 billion inflow. Is this exuberance about Japanese stocks rational or irrational?
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