Too many bullish views on Japan?

With investors looking beyond the tragedy of Japan's earthquake, tsunami and nuclear problems, I have been struck by just how many commentators have expressed bullish views on the Japanese stock market. Statistics and data have been quoted ad nauseum to support the view that Japanese equities are cheap: low PE (more so inthe mid and small caps - large caps are not all that cheap), the market selling at or slightly below book value (it may be more accurate to say that it trades close to book value), the limited impact on Japanese industry (possibly excepting tourism and insurance), the willingness of the BOJ to imitate the Fed and print money to support the economy, the renewed determination to weaken the yen etc etc.

While all these factors may be true (although I am not quite convinced) I am not that tempted to take a position and remain wary for a number reasons, not least because of the sheer number of bullish views. I could also add, that I have been listening to bullish views on the Japanese market since at least 2000 and, to date, such views have been mostly wrong. Other factors which give rise to doubts are the demographic handicap, the massive national debt and the reliance on technology based exports. The latter is something I expect to face increasing competition as a number of emerging economies continue to move up the value chain. Also, the impact of a lower yen on an investment in Japan cannot be ignored.

That said, the Nikkei remains about 13% below the level immediately before the tragedy, about half its most recent peak in 2007 and only about 30% above the most recent low in 2009. None of which really tells me a much about where the market will go in the near term future, and I remain cautious - I tend to agree with those who say that the market looks cheap but remain concerned about the macro headwinds. If I take a position it is likely to be a small one - my conviction is not high enough for more.