- Variable Rates of Return from Stocks
- Speculative Bubbles Are Often Followed by Years of Below-Average Investment Performance
- The Moral of the Story—Be a Flexible, Opportunistic Investor
- Growth Targets—"The Magic 20"
- Growth Target Zone
- Active as Opposed to Passive Management of Assets
- Diversification—A Major Key to Successful Investing
- Income Investing—Time Diversification
- Creating a Bond Time Ladder
- Increasing Returns from the Stock Market while Reducing Risk
- Useful Market Mood Indicators That You Can Maintain and Use in Just a Few Minutes Each Week
- Relationships of Price Movements on NASDAQ and the New York Stock Exchange
- How to Identify Periods When NASDAQ Is the Stronger Market Area
- General Suggestions
This chapter is from the book
This chapter is from the book
This chapter is from the book
Speculative Bubbles Are Often Followed by Years of Below-Average Investment Performance
The Japanese stock market has still not recovered following the market peak that developed between 1989 and 1990.
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Figure
1-2 Fifteen years of underperformance following the peak of the
Japanese bull market.
There have been numerous trading opportunities in the Japanese stock market
since the peak of its speculative bubble as 1989 drew to a close, but
longer-term investors have not had an easy time.
Figure 1-2 shows the Standard & Poor’s 500 Index aligned below the Japanese Nikkei Index in such a way that their peaks and prepeak periods align. The similarity of these two markets is actually quite striking. If the Standard & Poor’s 500 Index were to follow the path of the Japanese stock market, a full market recovery would not get under way until at least 2010.
This would not be unusual. Gold reached a peak level of approximately $800 an ounce during a final buying panic during the late winter of 1980. Prices remained below $500 an ounce through most of 2005—a full 26 years after—before rising during the first four months of 2006 to above $650 per ounce.