Why does an explanation always have to be complex? To make us feel more intelligent? Have a look at the following chart: As for investors from BRIC, much of their wealth has been based on a general lower interest rate (YEN at .5%) and money supply bubble, once this money is pulled (as is currenctly the case), that "wealth" can easily disappear. And yes, BRIC was a bubble (just like Housing, AG, etc...).
short&naked, I don't see how you can apply the birth rate of the US to the commodity asset class, since it's global. Do you have a world chart?
of course if you prefer we can keep it simple - e.g. everything is a bubble including Chinese labor working 24/7 for tenth of the American wage... by definition BRIC people do not have right to invest into stocks for their pensions...this is a privilege for western folks.
Hi shortnaked, What is the purpose of showing this chart? And the purpose of showing N225 in constant Yen terms? Is it savings rate has been increasing in Japan and yen has strengthen??
Someone correct me if I am wrong, but isn't the N225 and the Dow set to the same value when the N225 was invented? If this is the case, then the argument about hardwork and growth doesn't apply -- it just says that Japanese and Americans ended up with the same long term growth despite path differences due to monetary policy that should have no long run effect.
can u also post the p/e chart for the Dow or sp500? N225 valuation in the 80s is p/e50...crazy stuff. How much would the Dow be on that kind of p/e? Probably 40,000?