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Japan's Nikkei surpasses 1989 all-time high
- rayiner 3y ago> The rally has also been supported by a weaker yen, which has shed about 6% against the dollar so far this year and seems on track to drop to to 33-year lows touched late last year. We just got back from Tokyo and the prices for everything were crazy low. Ordered a bunch of sushi at a mall sushi place in Kyoto for what it would cost for Chipotle in DC. It was a huge shock when we flew back through SF and paid $13 each for a taco truck burrito in Millbrae. The Japanese folks I’ve spoken to are pretty grumbly about the weak yen, though.
- seanmcdirmid 3y agoWent this summer and it was a great deal for a two week vacation. As long as you can get an ok price for plane tickets, it is cheaper to visit Japan than much of the USA (assuming American). It’s too bad China is still hard to get to by plane (Russian airspace being closed really hurts).
- rayiner 3y agoWe flew ZipAir which has amazing prices on lay-flat seats, around $2,000 round trip. Also significant discounts for kids: tickets for my 2 year old and 5 year old were just a few hundred dollars round trip.
- Scoundreller 3y ago> It’s too bad China is still hard to get to by plane (Russian airspace being closed really hurts). Assuming you're flying from eastern US, taking the pacific route to bypass RU airspace instead of the polar route doesn't add that much distance to get to coastal China. And Chinese airlines can still overfly RU.
- seanmcdirmid 3y agoI’m coming from Seattle. Before the pandemic, we had two direct flights. Now the cheapest flight to Beijing is through Istanbul, and the next cheapest ticket (with a much more reasonable flight time) is 50% of the cost, and stop in either Japan or Korea to switch planes. If you are going to southern China you wouldn’t be save so much going over far east Russia anyways, I guess. Also, Chinese airlines can’t overfly Russia on the way to the USA, at least for newly approved flights: https://www.reuters.com/world/chinese-airlines-avoiding-russian-airspace-new-us-flights-2023-06-01/ https://www.reuters.com/world/chinese-airlines-avoiding-russ... Just 12*2 weekly round trip flights between the USA and China really sucks. There were a lot more before the pandemic. But it seems like we are going to 35 soon? https://simpleflying.com/us-china-lift-number-weekly-flights/#:~:text=Limits%20on%20weekly%20flights,a%20separate%20increase%20in%20flights https://simpleflying.com/us-china-lift-number-weekly-flights.... (Or already?)
- mixmastamyk 3y agoHow is the visa, biometrics, surveillance situation there these days? Was just telling someone yesterday that I’ll probably never make it there.
- seanmcdirmid 3y agoVisa situation is a bit easier since they don’t require an invitation letter for Americans anymore. I’m not sure about the biometrics and surveillance now, but it should be limited to a finger print and…China probably has little interest in monitoring you while in the country, they would rather have more tourists than less, as long as you aren’t unlucky enough to be picked for retaliation (or naive enough to snap pictures of navy ships in tourist areas).
- mixmastamyk 3y agoThanks. Well, everyone says there’s little interest in…, but for some reason surveillance keeps increasing. That tells me there actually is interest.
- TaylorAlexander 3y agoChecking prices on google flights, assuming a trip in April from SFO where I live, cheapest option is about $800 round trip to Tokyo, or $1050 to Shenzhen. A bit cheaper but maybe not a significant difference for such a long distance trip.
- justworkout 3y ago> The Japanese folks I’ve spoken to are pretty grumbly about the weak yen, though. Your money losing half its value in about a year tends to do that.
- cko 3y agoUSD to JPY 1y chart does not show a 50% decline - more like 11%
- justworkout 3y agoBecause it already collapsed a year ago. Look at 5 years.
- clipsy 3y agoIt lost ~33% of its value vs the US Dollar in 5 years and you claimed it lost half its value in "about a year."
- justworkout 3y agoDecember 2021 to October 2022. 103 yen to 149 yen. Sorry for overestimating. It was only 10 months. :)
- cko 3y agoI'm trying to reverse engineer your thinking. Did you do 150 - 100 = 50, then use 100 as the denominator to get 50%? Because that's not what "losing 50% of value" means.
- clipsy 3y agoGoing from ¥103/$1 to ¥149/$1 is a 30.9% loss in value. A 50% loss in value would be going from (eg) ¥100/$1 to ¥200/$1.
- deleted 3y ago[deleted]
- asutekku 3y ago> Ordered a bunch of sushi at a mall sushi place in Kyoto for what it would cost for Chipotle in DC Mall sushi has always been cheap in japan
- okdood64 3y agoFood, in general, has always been cheap in Japan.
- rapsey 3y agoThe US has become extraordinary expensive compared to most of the world. Or to say it differently the dollar is likely quite overvalued.
- ekianjo 3y agothe dollar is hitting record inflation rates though. does that mean the worst is yet to come for the dollar?
- gumby 3y ago> record inflation rates Record? I guess you didn’t live through the 1970s, much less post WWI and WWII. Of course the deflation of the 1930s was even more destructive!
- justinzollars 3y agoThey changed the way we measure inflation big time since the 70s. My bills are up 40% in the last 3 years. The interesting thing is this is far from over. We will see how this ends. I'm not optimistic.
- lottin 3y agoSo you're saying that the US Bureau of Labor Statistics should throw their statistical methodology out of the window and instead use your bills to measure inflation?
- teitoklien 3y agoI doubt the main commenter, meant it that way, why is there any need to bash them ? It’s a political issue, well criticised and commented on, that governments intentionally game metrics like inflation, etc to look good on paper for incumbent presidents and heads of state. Also, the inflation rate is a very inconsistent number, different regions of the US has different rent price increases, different cost of labour increases, different product prices for a lot of goods. How can the nation be entirely ruled by one common inflation rate. All statistics like this which have to target so many regions, environments, and scenarios, always have to make decisions, that sacrifice some scenario or the other, where the “score” is a very poor indicator This applies not just to inflation, but other metrics like gdp per capita, employment rate, etc. There is no need for that condescending tone, especially when the author is talking about their increased cost of living, which prolly hurt their purchasing power.
- mym1990 3y agoSame! Just got back and I really miss the cheap everything, and relatively high quality as well. Picked up some Uniqlo things that would have been 2x the price in the US.
- minebreaker 3y agoSo sad "We can't afford Uniqlo" is a meme in Japan...
- mcmoor 3y agoI guess the meme is because Uniqlo is cheap as fuck there that one have to be so poor to not be able to afford it. But ironically in my country, it's quite a prestige brand because my currency is even weaker so it's actually quite expensive.
- minebreaker 3y agoThe meme is about the inflation. Uniqlo was cheap as fuck. Now it's gotten so expensive that even median Japanese can't afford it.
- bmoxb 3y agoI wouldn't go that far. Sure, it's not as cheap as it used to be, but the average Japanese person can certainly afford to shop there.
- minebreaker 3y agoAs always with the memes, I agree that it's largely an exaggeration. But I can assure you that it is definitely getting too expensive these days, and I'll think twice before buying from them.
- KptMarchewa 3y agoIdk but maybe Uniqlo is uniquely cheap in Japan as Japanese chain? I've bought Uniqlo in Poland, UK, USA and Korea and prices stayed relatively consistent.
- rbanffy 3y ago> The Japanese folks I’ve spoken to are pretty grumbly about the weak yen, though. Worth noting that the Yen was much stronger back in 1989. These peaks are not the same.
- mekster 3y agoMy graph says it's about the same against USD.
- megablast 3y agoSushi is cheaper in Japan?
- anthk 3y ago$13 it's damn expensive, by comparison you can get a decent meal (nothing fancy, but not fast food level) at mosts restaurants in Spain.
- crossroadsguy 3y agoPerils of dollar maintaining whatever value it wants to maintain by just whims and fancy and the rest of the world trying to wag their tails and trying to keep up, or not.
- ipnon 3y agoRestaurant food is cheap in Japan because there are many high-quality restaurants. The competition drives the price down. Furthermore it may be in the best interest of Japan for their monetary policy to weaken the yen because it induces demand in tourism.
- glandium 3y agoTourism is a tiny part of Japan's economy.
- deleted 3y ago[deleted]
- deadbabe 3y agoFinally people can stop pointing to the Japanese stock market as an example of a crash that never recovered.
- thsksbd 3y ago30 years to reach nominal parity? Normalize out inflation and the Nikkei still sucks - despite Japan's infamously low inflation.
- xyzzy4747 3y agoWell it also paid dividends the entire time too which doesn’t get factored into the price. So maybe it matched up with inflation. I don’t know either way. You’d have to compare the total return with the total inflation.
- dosinga 3y agoInflation was about 0.5% and dividend yield around 1% so it's still up
- nmfisher 3y agoThe lesson is still relevant though - i.e. if you bought shares in the top 100 Japanese companies in 1989, it would have taken you ~35 years to break even in nominal terms. That's clearly a bad investment.
- Grimburger 3y agoForgetting dividends here.
- yyy888sss 3y agoPrice of gold in 1989: ~2000 yen/g Price of gold in 2024: 9,800 yen/g
- SECProto 3y agoHere's data for the price of gold over the same period in USD, showing almost same 5x increase. Could you explain the relevance of either to this story about the Nikkei? Price of gold in 1989: ~$370 USD/oz Price of gold in 2024: ~2000 USD/oz
- lmm 3y agoThe relevance is that this is not remotely an all-time high when denominated in gold (and, presumably, an implicit claim that a valuation in gold is in somehow more "real" than a valuation in nominal yen)
- kortilla 3y agoThat’s idiotic because nobody actually deals in gold. It just means gold appreciates some amount. The way this is handled is standard inflation adjustment based on things people actually use.
- UncleMeat 3y agoOkay. But denominating in gold is a weird thing to do and only looks this way when you pick specific dates. Pick 1987 and 2000 as your dates and things look very different.
- bobthepanda 3y agoIn 2021 the Bank of Japan had become the largest shareholder in the Nikkei. Is that still true? https://www.bloomberg.com/news/articles/2020-12-06/boj-becomes-biggest-japan-stock-owner-with-434-billion-hoard https://www.bloomberg.com/news/articles/2020-12-06/boj-becom...
- mariojv 3y agoNot sure, but BOJ was a net seller of stocks in 2023: https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-turned-net-seller-of-stocks-in-2023 https://asia.nikkei.com/Economy/Bank-of-Japan/BOJ-turned-net... So, it seems like they're at least starting to offload their stock holdings. I was very surprised when I learned that their central bank was purchasing stocks. I'd heard about it first in 2020, but apparently it had been going on before the pandemic. It makes me wonder if the US stock market crashed hard enough if the Fed would start buying up stocks on the major indexes. Are they even legally allowed to do this? If so, what other assets can the Fed acquire? REITs? What about direct real estate purchases? I wonder if corporate real estate crashed hard enough from remote work if they'd prop it up.
- gingkoguy 3y agoBro that happened in covid
- mariojv 3y ago??? Are you claiming the Fed has directly purchased US stocks? I don't think they have. I've only ever seen reports of them buying government and mortgage debt: https://www.cnbc.com/2022/12/22/how-the-federal-reserve-affected-2022s-stock-market.html https://www.cnbc.com/2022/12/22/how-the-federal-reserve-affe... You can argue the purpose of these actions was to prop up the stock market, but I don't think they've ever intervened in as direct a manner as the Bank of Japan has with buying company stocks.
- kortilla 3y agoNo it didn’t. The fed doesn’t buy stocks
- SCAQTony 3y agoTheir economy is still not doing well. The sole reason that the NIKKEI is storming it is that banks only offer negative interest rates on bank deposits. Thus, the NIKKEI is the only real option left. https://www.focus-economics.com/country-indicator/japan/interest-rate/#:~:text=Interest%20Rate%20forecasts%20and%20outlook%20for%20Japan&text=The%20BOJ%20Policy%20Rate%20ended,3.50%25%20at%20end%2D2022 https://www.focus-economics.com/country-indicator/japan/inte....
- givemeethekeys 3y agoJapanese TINA. They finally have inflation, which means they finally have growth regardless of whether they have productivity gain.
- yayitswei 3y ago"There Is No Alternative"? I had to consult ChatGPT to get that acronym explained.
- n6242 3y agothank you for clarifying, the grandparent comment made no sense
- overstay8930 3y agoI was highly suspicious of the implication that the Japanese government would do anything other than making sure nothing changes
- minebreaker 3y agoMeanwhile the real wages are dropping like a waterfall and the cheap yen is hurting our lives disastrously. https://www.asahi.com/ajw/articles/15151006 https://www.asahi.com/ajw/articles/15151006
- amrocha 3y agoFunny how every single foreigner seems to think the "weak yen" is ruining everyone's lives and yet I've never heard a Japanese person complain about it
- yamakadi 3y agoMy wage in terms of dollars have remained the same for the last 5 years despite earning double. It's not ruining my life only because it takes longer for prices to increase here -- but they are definitely increasing. Japanese people also don't like talking about wages and not everyone compares what they are making to the dollar. I have heard plenty of colleagues, friends, and family complain. It's more about how the number of diapers in a bag has decreased steadily from 72 to 56 than boy my life is getting ruined by weak yen. The more prevalent complaints are from fellow mortgage borrowers. Variable rates in Japan have been steady for nearly 30 years, meaning a substantial number of borrowers are watching the central bank's moves like a hawk and are terrified of even any talks of rate increases. TLDR: We are just not loud complainers (and frankly, if any Japanese person you know is hopefully very lucky, they might be earning just enough to not notice it all)
- amrocha 3y agoI hear what you're saying about Japanese people not complaining as much, but I don't think it's just that. The only time they complain about 円安 is when they go abroad, which isn't very often. The problem is a lot more noticeable for foreigners living in Japan temporarily because they don't think of their worth in the local currency. They then generalize their problems to the rest of the population. When you think of your money in dollars, and you see it going down a lot, it looks like a life or death crisis. But the average person in Japan sees prices go up a bit, which is frustrating, but not to the same degree.
- mlcrypto 3y agoHmm maybe the bull market is just beginning around the world
- MichaelRo 3y agoJapanese man in his 70s: "Yippee Yay! It only took 34 years to get back what I invested in the index, because indexes always go up. And now everything costs double".
- riffraff 3y agoThe returns of the investment are not the index price, these companies have been paying dividends for 30 years. If you look at the actual returns they recovered years ago (tho not so long).
- mdorazio 3y agoLooks like the Nikkei 225 average dividend yield is around 1.4%. If you bought in 1989 and reinvested dividends it looks like you would have briefly broken even in 2015 (ignoring inflation), then hit solid black sometime in 2017. This is completely absurd and shows how huge of a factor timing is in market investments. Remember, kids, dollar cost averaging is usually the way to go.
- valzam 3y agoYeah but it's also an absurdly rare occurrence that someone would put 100% of their wealth I to the stock market RIGHT before the crash and then never invests again (more than the dividends). These headlines are fun and all but not very relevant for most people
- offices 3y agoThe Boglehead philosophy has always required depending on the exceptionalism of a single country during a single century.
- infecto 3y agoYou are not entirely wrong. The thing is though, the US has been an economic powerhouse on the global stage for decades. The US health impacts much of the rest of the world's markets.
- alephnan 3y agoMeanwhile, Japan entered recession last week.
- patrick451 3y agoAnd this is why investing I don't invest in index funds.
- Pooge 3y agoI really don't see how one example of an index going down makes all the others a bad investment. Sure the Nikkei is diversified across industries but it's not comparable to international indexes.
- lucianbr 3y agoI think the point is that "indexes are overall superior to stock picking, and always go up over long periods of time" is disproved by the history of Nikkei. Sure, at a given time and place, an index may be better. At other times one or two stocks may be better. But I think the "time in the market beats timing the market, always" is kind of negated by Japan's lost decades.
- adastra22 3y agoCherry picking the ONE counter example is not proving your point.
- KptMarchewa 3y agoSecond part of typical boglehead advice which you conveniently ignored is dollar cost averaging.
- riffraff 3y agoThat's not the only issue with this reasoning, this index is not a total returns one. And if you had been investing regularly you'd have bought companies at the Lowe price, which has produced a 2-3 times return in the last ten years. Still, I also prefer global indexes.
- derriz 3y agoInvesting in the (broad) index doesn’t promise a positive real return. It promises lower volatility than any stock picking strategy. If you want exposure to the Japanese economy, then index investing is still the right choice if you want to maximize return for a given volatility.
- niemandhier 3y agoThe crisis in Europe, the unpredictability of American politics, and the mounting tensions with China make Japan a attractive alternative for investing right now. Japan has been in an economic stasis for decades, some believe this to be triggered by the 1985 Plaza Accords which devalued the Dollar against the Mark and the Yen. Germany recovered from that shock by absorbing East Germany and pushing EU integration. Japan did not have this options, but the new multipolar world order might give them an opportunity. This will probably be to the detriment of Germany and the US, which both probably would like to increase the value of the yen. But given that the American are not perceived as a reliable partner right now, I do not see something like the Plaza Cords coming again any time soon. Plaza Accords: https://en.wikipedia.org/wiki/Plaza_Accord https://en.wikipedia.org/wiki/Plaza_Accord Impact on Yen and Mark: https://www.macrotrends.net/2550/dollar-yen-exchange-rate-historical-chart https://www.macrotrends.net/2550/dollar-yen-exchange-rate-hi... https://de.statista.com/statistik/daten/studie/312004/umfrage/wechselkurs-des-us-dollars-gegenueber-der-d-mark/ https://de.statista.com/statistik/daten/studie/312004/umfrag...
- farseer 3y agoGermany is doing just fine, it passed Japan as the bigger economy. Japan is one declining, their demographic shrinkage and a stagnant economy for the past 3 decades.
- adastra22 3y agoDid you read the article? Or even just the headline?
- puzzlingcaptcha 3y agoA rally in the stock market does not necessarily reflect a strong economy. See e.g. Abenomics
- pepy 3y agoDAX made new all-time highs while Germany's economy is not doing great at all.
- deleted 3y ago[deleted]
- nothercastle 3y agoThey finally got the inflation they wanted for 30 years