Money For the Rest of Us
Lessons from Japan's 34 Years of Stock Market Underperformance
Feb 28, 2024
Exploring Japan's 34 years of stagnant stock market performance, the podcast delves into the causes behind the underperformance, including the stock bubble and demographic challenges. Insights on Japan's unique housing market trends, economic growth strategies, and lessons for investors. Reflections on Japan's work culture, aging population, and the significance of understanding market dynamics for long-term investment success.
52:40
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Quick takeaways
- High valuations in Japan led to the 1989 bubble, resulting in a 3.1% annualized drag on stock market performance.
- US earnings growth outpaces Japan with 6.2% annualized versus Japan's 3.1% on earnings per share basis.
Deep dives
Lessons from Japan's 34-Year Stock Bear Market
Japan's Nikkei 225 index broke peak after 34 years, returning essentially zero in price. Comparing to US, Japan's stock market returns 1.1%, while US returns 9.6% annualized over the 34 years. High valuations in Japan led to the 1989 bubble, resulting in a 3.1% annualized drag. Japan's stock market is improving but faces challenges like demographics, productivity, and changing cultural norms.
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