This year is a textbook example of how an economy and its stock market are two different things.  While the economy in the eyes of many limped along the stock market, especially small and midcaps, have had a stellar year.  Looking forward to 20111 Japan will be an interesting test case of this analogy.  There are plenty of reasons why one should be cautious about the Japanese economy.  Many analysts are focusing on Japan’s continued need to finance large fiscal deficits.  Given those risks why would one be interested in investing in Japanese stocks?  Barry Ritholtz has ten reasons why Japan might be worth a look.  The point being that every market has positive and negatives.  The challenge is identifying which of those the market has already incorporated into prices.  In today’s screencast a a look at a handful of items on the Japanese economy and stock market.

Items mentioned in the above screencast:

The bear case for Japan’s economy.  (Slate also Atlantic Business)

On the risks to the Japanese bond market.  (Global Macro Monitor)

The bull case for Japan’s stock market. (Big Picture)

Daily chart of the iShares Japan ETF (EWJ).  (Finviz)