Ray are you falling into the same trap as Elroy? The question is if its EV, not when they go up. Besides the Japanese economy has hardly grown since 1989, its sickly GDP growth greatly retards the stock prices going up. However Japan, even with its large size, is just an anomaly. All other major world markets have gone up greatly since then and the Nikkei's share of the world's investment money is quite small, especially when you consider almost as much Japanese money is invested in the US markets as it is invested in the Japanese market.


I agree that bubble prices can and will cause occasional problems with the prices going up, however I think its fairly likely that the Nikkei will be above its 1989 price sometime before 2015, if not much sooner. And I think you GREATLY underestimate the Japanese and their economy. How many other countries in the world could endure 10 years of almost no growth, terrible natural disasters, a political and banking mess that few countries could match in recent times...yet still easily maintain its standing as the world's second biggest economy? Further in a globalized world, I like the Japanese structure. They will have problems with their aging populations strain on finances, but how can you argue against a country with a very wealthy population, a homogenous society, and one of the world's strongest devotions to education??? Natural resources have nothing to do with being a successful nation in the 21st century. The US has to import almost every major natural resource it needs and you don't seem to think this country will have problems. After all if natural resources were so important, why haven't Australia and Canada taken a stronger role in the world's economy? They are mere second rate players that are forced to follow in the footsteps of the US and the UK with their currency getting battered badly for long stretches of time. For all its troubles, Japan's currency has held much of its value since 1990 because the world will still clamor for Japanese products and still wants desperately to sell its goods to them because there are few places with such willing and able buyers. Maybe I am making the mistake being the pseudo-econ guy. I admit I am not a market scientist, but I still think looking at the world with an economics perspective first is the best way to see the big picture, while I will leave the tidbits of science or past stock price movement history to the others...