Loading ...After 1989, Japan peaked and started losing manufacturing jobs to China. Are we going to see a 38,000 Dow and rates to zero later on like Japan? Or has China peaked out like japan did economically, and its the USA’s turn to get all the production manufacturing jobs.
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A quarter-century ago on Dec. 29, 1989, Japan’s Nikkei Stock Average finished the year at an all-time high of 38916, more than twice its current level. In retrospect, it’s clear the market was at bursting point, but at the time the mood was still confident, with some analysts predicting a surge beyond 45,000 by the end of 1990.
“Japan’s stock market spawns two kinds of investors: believers and skeptics. The believers are getting rich. The skeptics are getting sore,” Marcus W. Brauchli, then a staff reporter for The Wall Street Journal, wrote in an article published Jan. 2, 1990. “Just when the market seems top-heavy, it heads even higher,” he said.
The confidence in the market stemmed from the continued strength in shares in 1989, despite it being a relatively bad year for the Japanese economy, with the introduction of a nationwide 3% sales tax.
But things didn’t turn out as expected. Far from hitting 45000, the Nikkei plunged more than 38% in 1990. By April that year the Journal was referring to the end of a bubble, though the longer-term impact of the market collapse was still largely unforeseen.
“So far this year, the Tokyo stock market is off 28%, dragged down by the combination of soaring Japanese interest rates, a sinking yen, rising inflation pressures, and a general loss of confidence in the same bureaucrats who are credited with engineering Japan’s post-World War II financial and economic miracle,” Mr. Sesit and Mr. Brauchli wrote in an article titled, “Tokyo’s Market: Was it a Bubble Just Waiting to Burst?” on April 3 that year.
“This is the real thing. It’s over,” one analyst was quoted as saying. “The bubble has burst.”
https://blogs.wsj.com/japanrealtime/2014/12/29/tokyos-stock-bubble-25-years-on-from-the-nikkei-peak/