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20 years later, Japan is 1/4 of peak...
Old 12-29-2009, 11:37 AM   #1
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20 years later, Japan is 1/4 of peak...

Wow - imagine ER'ing in Japan 20 years ago...

Actually, NASDAQ will probably show same - I'll bet in 2020 the index is still a fraction of 5,000.

BBC News - Nikkei peak: 20-year anniversary

It is exactly 20 years since Japan's Nikkei hit its peak of 38,957.
The index now trades at about quarter of that value. In other words, it has lost about 73%, closing at 10,638 on Tuesday.
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Old 12-29-2009, 12:42 PM   #2
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I often thought that the US was on a similar trajectory to Japan of 20 years ago. I do wonder if there is a way to assess how well folks are doing there. If someone retired and had a pension or a diversified portfolio are they doing well? Is there a story besides the stock market or GDP? I do not hear stories about folks there sleeping under bridges, having nutritional issues or missing medical care. Its worth looking at their stock and real estate market but maybe there is something to learn about how they coped with the situation? Or are they and us headed towards an even more difficult situation?
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Old 12-29-2009, 01:12 PM   #3
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I don't understand the Japanese economy - also saw this the other day - the government will spend over 2x the tax receipts for the next year.

Something about that sounds like a disaster in the making..........

http://www.nytimes.com/2009/12/26/wo...er=rss&emc=rss

Tax receipts, at about $405 billion, are expected to make up less than half the government's budget, forcing the government to borrow more than it receives in revenues another postwar first.
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Old 12-29-2009, 02:06 PM   #4
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I do not hear stories about folks there sleeping under bridges, having nutritional issues or missing medical care.
I have a friend who travels back and forth to visit family in Japan -- he says he finds homeless people at the train station, etc. -- something he'd never have dreamed possible for that society 20 years ago.

Just one data point tho...
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Old 12-29-2009, 02:42 PM   #5
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Dividends might help mitigate that a bit.

A good reason why they maybe should have kept a substantial amount invested in equities outside Japan. How did bonds do?

I don't think you can let these extreme cases dominate your planning, or you might never retire. However you certainly have to plan for them, perhaps with a reduced financial lifestyle if the worst should happen.
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Old 12-29-2009, 02:44 PM   #6
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I don't think you can let these extreme cases dominate your planning, or you might never retire. However you certainly have to plan for them, perhaps with a reduced financial lifestyle if the worst should happen.
Yep. Living simply, owning our home and having zero debt is a big part of our financial plan, partially for that reason.
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Old 12-29-2009, 03:07 PM   #7
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Change your analysis period from 20 years to 25 years and you have a completely different story. Instead of down 75% from the peak in 1989, it is roughly flat over the 1984-2009 period (Nikkei 225 was at 10,600 last in Sept 1984). Add in decades of deflation and dividend payments and it doesn't look nearly as dreary for a Japanese retiree. Unless you pulled the plug during the peak years. Not sure if a 4% SWR would have worked though. However I know the US market was up roughly 10% per year on average over the last 30 years, so a globally diversified Japanese investor wouldn't have done nearly as poorly as the Nikkei 225 would suggest.

Remember that anyone who had a million bucks in their portfolio in Japanese stocks in 1984, all of a sudden had close to 4 million bucks in 1989.

The "what if it is like Japan circa 1990" has been discussed numerous times over the years here, FYI, for those interested and inclined to search.
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Old 12-29-2009, 03:48 PM   #8
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Hmmm - pssst Wellesley san. I wonder how a balanced Japanese version of dividend stocks and fixed corp. bonds would have fared over various periods.

?And what the heck is a postal savings bond or whatever it's called that many Japanese retiree's used.

heh heh heh -
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Old 12-29-2009, 04:12 PM   #9
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I'm currently reading The World Is Curved by David Smick and he talks a lot about the Japanese, the 1980's bubble, their investment culture, etc. What I gather is that very few Japanese people were actually buying stocks as a way to save for retirement - not like everyone does in America with 401K's. Smick says that the Japanese people are extremely risk averse and typically relied only on interest from simple bank deposits for their retirement income. Since interest rates in Japan have been near 0% for 20 years they now invest primarily in foreign government debt like US Treasuries. He indicates that the stock bubble was largely the result of foreign investment when everyone was predicting that the 21st century would belong to Japan - in effect, American investors were probably hurt more by the Nikkei bubble than Japanese investors.

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Before You Gloat on Those Japanese
Old 12-29-2009, 04:28 PM   #10
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Before You Gloat on Those Japanese

Perhaps some history will keep this thread in perspective.

- Just look at the NASDAQ exchange.

todays close at 2288 is only 45 percent of the all time high of 5048.

Back in March the NASDAQ was around 1268 or right around 25% of the peak.

Did any of you take a bath in tech stocks ? OR better yet take a bath and own up to it ?
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Old 12-29-2009, 05:20 PM   #11
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What is a 'tech stock'? What is its dividend?
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Old 12-29-2009, 08:10 PM   #12
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Quote:
Originally Posted by Delawaredave5 View Post
Wow - imagine ER'ing in Japan 20 years ago...

Actually, NASDAQ will probably show same - I'll bet in 2020 the index is still a fraction of 5,000.

BBC News - Nikkei peak: 20-year anniversary

It is exactly 20 years since Japan's Nikkei hit its peak of 38,957.
The index now trades at about quarter of that value. In other words, it has lost about 73%, closing at 10,638 on Tuesday.
Just curious. Is this inflation adjusted? Most times equity prices aren't, which would make the fraction probably significantly smaller. Of course, not knowing much about Japan, maybe they haven't had any inflation in the last 20 years.
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Old 12-29-2009, 09:25 PM   #13
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If a person would have sold at the top, he/she would have pulled off the market timing event of the century.

They must still offer a good retirement system there. How else would anyone would retire there unless they had all their eggs invested outside of Japan?
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Old 12-29-2009, 10:19 PM   #14
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From someone who lives there: Japan is hosed. The former government (LDP) was not capable of bringing the nation into the 21st century, so the people voted in a new government, who are hell-bent on taking the country back into a dreamland (lifetime employment, no flexibility for companies to adjust labor levels to match demand levels, bigger social security checks, cash allowances for families with kids, reduced taxes, bigger paychecks for the lawmakers) that is impossible to achieve, and which will, in the end, destroy the country by taking it backwards while the rest of the universe moves in the "other" direction. BTW, most of my Japanese direct reports seem to have their money mostly in non-Japan funds. They don't believe the Japanese economy will ever fully recover...and it will get worse before it gets better. The only chance the country really has is to change the government, reign in government spending, reduce bureaucracy, and de-regulate the arcane, ancient, ineffective, and market stfling legal system.

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