Saturday, August 29, 2009
S&P 500 May Surge 40% in Duplication of Japan
Yesterday on Bloomberg.com there was a fascinating chart overlaying the S&P 500 since 1990 on the Nikkei 225 since 1980. The caption read, "U.S. stocks are behaving like Japanese ones in the 1990s, meaning the Standard & Poor's 500 Index may return 40 percent in the next year, according to analysts at Bank of America." Click on the "GRAPHIC" tab for the chart.
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The two are not anaolgous in so many ways. Firstly, Japanese household debt was very small at that time and savings were high. The average Japanese household survived the "lost decade" with balance sheets intact. The USA does not have such a cushion. Indeed, 31% of American households are less than a month away from soup lines. Japan was and is a net exporting nation. the USA is a net importer. The list of differences goes on and on.
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