12 ms·

The Nikkei is still ~50% below its 1989 high. Hasn't even approached that level since. Downturns can go on for decades.

by neural_thing 7y ago

ktta 7y ago
Doesn't that have to do with Japan's specific long term problems though?
- greenshackle2 7y ago
  Thankfully the U.S. doesn't have specific long term problems. (Edit to make this less flippant: like bubbles in education, housing and stocks.)
  - ktta 7y ago
    > like bubbles in education, housing and stocks Those aren't long term problems if you compare them to Japan's. It has been 30 years+ since 1989, and I'd believe that is long enough time for the bubbles in US to correct themselves.
    - greenshackle2 7y ago
      That's fair.
3fe9a03ccd14ca5 7y ago
Lifetimes.
cletus 7y ago
I didn't think this could still be true but apparently you are correct [1]. Wow. That being said, there are factors to contribute to this: - Essentially zero population growth [2] - A government and a system that propped up an insolvent banking system that likely extended the downturn significantly [3] - A massive asset bubble that we really haven't seen the likes of, not even in the subprime era. [1]: https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data https://www.macrotrends.net/2593/nikkei-225-index-historical... [2]: https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_natural_population_growth https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_... [3]: https://qz.com/198458/zombies-once-destroyed-japans-economy-now-theyre-infecting-chinas/ https://qz.com/198458/zombies-once-destroyed-japans-economy-...
- mensetmanusman 7y ago
  Yep, over half of GDP growth is tied to population growth. If 2% of humanity is about to die...
  - virgilp 7y ago
    2% (maybe more actually) is the mortality rate of those infected. But so far infection rate was 0.001% ; it would need to be 3 full orders of magnitude worse to even approach an infection rate of 2%....
    - travisjungroth 7y ago
      How long did it take Italy to go up three orders of magnitude in infection rate?
      - Udik 7y ago
        A bit less than 10x, an order of magnitude, every week. It's been really is very easy to see the future up until now. There's 9000 cases in Italy now; by the 16th of March, factoring in the containment measures, they could be 60-80k. About 10% need intensive care; there's probably 3000 IC beds available now. Very simple.
        travisjungroth 7y ago
        Yeah, I'm not sure why I was downvoted. It was a leading question to point out that "3 orders of magnitude" isn't far away at all.
        FabHK 7y ago
        From the statistics I’ve seen, unless there’s effective quarantine and countermeasures in effect, you can expect an order of magnitude (while most of the population is not yet infected, obviously) about every 2 to 3 weeks. Yay for exponential growth.
thedance 7y ago
Another good example of long-term decline is gold. In real dollars gold has never returned to its 1980 price. It went up 10x in the decade to 1980 and some people thought it would just go up forever. If you bought the dip after gold peaked, you're _still_ underwater.
- chii 7y ago
  The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding). Its only use is as a hedge against the gov't issued currency. Therefore, to bet that gold increases in value means you're betting against the country you're in doing well. But in that case, you're better off buying a bunker and bullets and long life stored goods. because gold is useless if the country you're in fails! The only other use for gold as far as i see is to dodge a country's foreign exchange restrictions, to launder money discretely, and to dodge inheritance taxes (if that's even possible with gold jewellery...).
  - cletus 7y ago
    > The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding) Gold being an excellent conductor while being mostly inert, solid at room temperature and highly malleable seems to be a pretty useful set of properties. > because gold is useless if the country you're in fails! Not entirely true. You have to look at why gold became one of the earliest mediums for exchange in the first place. I'd list six primary properties: 1. High density 2. Relative scarcity 3. Distinct appearance 4. Solid 5. Inert 6. Malleable It turns out density is a really important one. Why? Imagine your country stamps gold coins. If you can take a coin of unknown origin and weigh it against a known good coin, you can pretty easily detect a forgery by it having lower weight. Gold isn't the densest element but it pretty much was until modern times. The only one other that was reasonably accessible was platinum, which was pretty valuable in its own right. Even the apocalypse will have trade and need a medium for exchange. > The only other use for gold as far as i see You're not looking far enough. Gold has been used in places where the local currency has become questionable due to, say, inflation, (effective or actual) government confiscation and so on. Even refugees as recent as the Vietnam War would try and escape with gold. In recent years India tried to invalidate bank notes in circulation with very little notice that set off a bit of a panic. That's not a problem gold has.
OscarCunningham 7y ago
EDIT: This is wrong. There's no reason to ignore dividends. If you look at total return then it's above the high.
- neural_thing 7y ago
  According to https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... Nikkei is down 36% since January 1990 if you reinvest dividends. Do you have a source for your claim?
  - OscarCunningham 7y ago
    You're right. I read a chart wrong.
matchagaucho 7y ago
How frequently do the 225 companies in the Nikkei get updated? Maybe more a reflection of how the index is managed.
aguyfromnb 7y ago
>Downturns can go on for decades. Exactly. It feels like we've swung way too far to the side of "put your money into the market and forget about it". We have no way of knowing what the future looks like. The average bear market wipes ~35% or ~4.5 years worth of gains from your portfolio. Avoiding even a bit of that can have a substantial effect on your savings in the long run. Of course, timing the market isn't easy, and I'm not giving any advice on buying or selling. But the idea that these peaks and valleys don't matter simply isn't true. They matter, a lot.
- kortilla 7y ago
  Yes, and having winning lottery tickets matters, a lot. You might as well advise people to just avoid all of the days where the market goes down since that will make a massive difference to their returns. Timing the market is just throwing the dice. Go down that path and you’ll be entering the world of gambling with all of the bad psychology that ensues.
toth 7y ago
You should really adjust for dividends, in which case it is still down, but only -7.5%. [1] [1] https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... (I did Dec 1989 - Jan 2020. They don't have data latter than that)
eternalban 7y ago
https://vimeo.com/110710752 https://vimeo.com/110710752
ElonMuskrat 7y ago
The Japanese stock market is so completely different from the West - you can draw no applicable conclusions.
mcguire 7y ago
The Japanese economy and especially its financial markets were completely insane in the '80s. As in, large scale structural problems; some investors were "too important" to lose money so the brokers would reimburse them. See also the "Lost Decade(s)". (https://en.wikipedia.org/wiki/Lost_Decade_(Japan). https://en.wikipedia.org/wiki/Lost_Decade_(Japan).) The Nikkei's decline cannot be described as a normal "downturn". But, useful inferences for the current market are left to the reader.

The Nikkei is still ~50% below its 1989 high. Hasn't even approached that level since. Downturns can go on for decades.

ktta 7y ago

Doesn't that have to do with Japan's specific long term problems though?

greenshackle2 7y ago
Thankfully the U.S. doesn't have specific long term problems. (Edit to make this less flippant: like bubbles in education, housing and stocks.)
- ktta 7y ago
  > like bubbles in education, housing and stocks Those aren't long term problems if you compare them to Japan's. It has been 30 years+ since 1989, and I'd believe that is long enough time for the bubbles in US to correct themselves.
  - greenshackle2 7y ago
    That's fair.

3fe9a03ccd14ca5 7y ago

Lifetimes.

cletus 7y ago

I didn't think this could still be true but apparently you are correct [1]. Wow. That being said, there are factors to contribute to this: - Essentially zero population growth [2] - A government and a system that propped up an insolvent banking system that likely extended the downturn significantly [3] - A massive asset bubble that we really haven't seen the likes of, not even in the subprime era. [1]: https://www.macrotrends.net/2593/nikkei-225-index-historical-chart-data https://www.macrotrends.net/2593/nikkei-225-index-historical... [2]: https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_natural_population_growth https://en.wikipedia.org/wiki/Demographics_of_Japan#Current_... [3]: https://qz.com/198458/zombies-once-destroyed-japans-economy-now-theyre-infecting-chinas/ https://qz.com/198458/zombies-once-destroyed-japans-economy-...

mensetmanusman 7y ago
Yep, over half of GDP growth is tied to population growth. If 2% of humanity is about to die...
- virgilp 7y ago
  2% (maybe more actually) is the mortality rate of those infected. But so far infection rate was 0.001% ; it would need to be 3 full orders of magnitude worse to even approach an infection rate of 2%....
  - travisjungroth 7y ago
    How long did it take Italy to go up three orders of magnitude in infection rate?
    - Udik 7y ago
      A bit less than 10x, an order of magnitude, every week. It's been really is very easy to see the future up until now. There's 9000 cases in Italy now; by the 16th of March, factoring in the containment measures, they could be 60-80k. About 10% need intensive care; there's probably 3000 IC beds available now. Very simple.
      - travisjungroth 7y ago
        Yeah, I'm not sure why I was downvoted. It was a leading question to point out that "3 orders of magnitude" isn't far away at all.
        FabHK 7y ago
        From the statistics I’ve seen, unless there’s effective quarantine and countermeasures in effect, you can expect an order of magnitude (while most of the population is not yet infected, obviously) about every 2 to 3 weeks. Yay for exponential growth.

thedance 7y ago

Another good example of long-term decline is gold. In real dollars gold has never returned to its 1980 price. It went up 10x in the decade to 1980 and some people thought it would just go up forever. If you bought the dip after gold peaked, you're _still_ underwater.

chii 7y ago
The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding). Its only use is as a hedge against the gov't issued currency. Therefore, to bet that gold increases in value means you're betting against the country you're in doing well. But in that case, you're better off buying a bunker and bullets and long life stored goods. because gold is useless if the country you're in fails! The only other use for gold as far as i see is to dodge a country's foreign exchange restrictions, to launder money discretely, and to dodge inheritance taxes (if that's even possible with gold jewellery...).
- cletus 7y ago
  > The reason is that gold is itself a useless piece of metal (electronics and jewellery notwithstanding) Gold being an excellent conductor while being mostly inert, solid at room temperature and highly malleable seems to be a pretty useful set of properties. > because gold is useless if the country you're in fails! Not entirely true. You have to look at why gold became one of the earliest mediums for exchange in the first place. I'd list six primary properties: 1. High density 2. Relative scarcity 3. Distinct appearance 4. Solid 5. Inert 6. Malleable It turns out density is a really important one. Why? Imagine your country stamps gold coins. If you can take a coin of unknown origin and weigh it against a known good coin, you can pretty easily detect a forgery by it having lower weight. Gold isn't the densest element but it pretty much was until modern times. The only one other that was reasonably accessible was platinum, which was pretty valuable in its own right. Even the apocalypse will have trade and need a medium for exchange. > The only other use for gold as far as i see You're not looking far enough. Gold has been used in places where the local currency has become questionable due to, say, inflation, (effective or actual) government confiscation and so on. Even refugees as recent as the Vietnam War would try and escape with gold. In recent years India tried to invalidate bank notes in circulation with very little notice that set off a bit of a panic. That's not a problem gold has.

OscarCunningham 7y ago

EDIT: This is wrong. There's no reason to ignore dividends. If you look at total return then it's above the high.

neural_thing 7y ago
According to https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... Nikkei is down 36% since January 1990 if you reinvest dividends. Do you have a source for your claim?
- OscarCunningham 7y ago
  You're right. I read a chart wrong.

matchagaucho 7y ago

How frequently do the 225 companies in the Nikkei get updated? Maybe more a reflection of how the index is managed.

aguyfromnb 7y ago

>Downturns can go on for decades. Exactly. It feels like we've swung way too far to the side of "put your money into the market and forget about it". We have no way of knowing what the future looks like. The average bear market wipes ~35% or ~4.5 years worth of gains from your portfolio. Avoiding even a bit of that can have a substantial effect on your savings in the long run. Of course, timing the market isn't easy, and I'm not giving any advice on buying or selling. But the idea that these peaks and valleys don't matter simply isn't true. They matter, a lot.

kortilla 7y ago
Yes, and having winning lottery tickets matters, a lot. You might as well advise people to just avoid all of the days where the market goes down since that will make a massive difference to their returns. Timing the market is just throwing the dice. Go down that path and you’ll be entering the world of gambling with all of the bad psychology that ensues.

toth 7y ago

You should really adjust for dividends, in which case it is still down, but only -7.5%. [1] [1] https://dqydj.com/nikkei-return-calculator-dividend-reinvestment/ https://dqydj.com/nikkei-return-calculator-dividend-reinvest... (I did Dec 1989 - Jan 2020. They don't have data latter than that)

eternalban 7y ago

https://vimeo.com/110710752 https://vimeo.com/110710752

ElonMuskrat 7y ago

The Japanese stock market is so completely different from the West - you can draw no applicable conclusions.

mcguire 7y ago

The Japanese economy and especially its financial markets were completely insane in the '80s. As in, large scale structural problems; some investors were "too important" to lose money so the brokers would reimburse them. See also the "Lost Decade(s)". (https://en.wikipedia.org/wiki/Lost_Decade_(Japan). https://en.wikipedia.org/wiki/Lost_Decade_(Japan).) The Nikkei's decline cannot be described as a normal "downturn". But, useful inferences for the current market are left to the reader.