A must (credible) read about the rapidly deteriorating U.S. Markets: http://www.bloomberg.com/news/marketsmag/mandl.pdf
When markets sold off last May, some attrributed it to a sharp fall in monetary base in Japan as well as the statements that zero interest rate would be ended. http://www.boj.or.jp/en/type/stat/boj_stat/mb/base0605.htm It looks as though the chart on the right is recompiled current data from the above I would guess.
So I can conclude a lot of Japanese money is tied into/with the US market. Like the Japanese owns lots of U.S. government bonds and have lots of money invested in the US markets, right? But ending the zero interest rates indicate that the economy is gradually improving... So domestically they are getting better, but their economy is still very susceptible to the US conditions...
I know this is off the topic, but before Japanese pre-bubble time in early 80's, US economy did not affect Japan as much, because the Japanese did not hold US bonds nor had much money to invest in the US.. Is my conclusion some what correct?
Markets rise in some years, fall in some years and trade flat in others. They don't rise in perpetuity, year after year.
Returns for the stock market are driven by dividends plus growth in earnings plus inflation plus changes in the average P/E ratio. The dividend yield is a little under 2%. Real growth in earnings can't exceed growth in real GDP over long periods, and real GDP growth has averaged about 3% over the past century. Inflation is running a little under 3% currently. P/E ratios are pretty high, so let's optimisically assume they stay at the current level. Add these all together and we can expect 2%+3%+3%+0% = 8% annually. Your fully invested analyst, Aaron Schindler Schindler Trading