For 20 years, you've always heard about how horrible Japan's economy is. In 2008 you heard over and over about how the worst thing that could happen to America is a Japanese-style Lost Decade. It always sounds like Godzilla, or maybe the B-29s, have come back.
And yet, Japan doesn't actually seem to be a post-apocalyptic wasteland. A friend of mine who has lived in Japan since about 1980 said a couple of years ago that although he's always reading in the English-language press about how badly off Japan is, it doesn't see so bad when he steps outside. When he first arrived in Japan, the country was full of badly-dressed people and ugly buildings. Now it's full of well-dressed people and attractive buildings.
I guess I'm just obtuse. It finally dawned on me that the reason you hear about how horrible Japan is all the time is that it has been horrible for financiers since 1990. The Nikkei index is now only one-third what it was in 1990 at the end of a ridiculous real estate bubble in which the grounds of the Imperial Palace in Tokyo were theoretically worth more than all the real estate in California.
The New York Times runs a contrarian article about how you can make a lot of money investing in Japan because all investors hate Japan:
Japan's government finances are on the verge of collapse, and its economy has floundered for two decades. ...
"Japan is by far one of the cheapest markets in the world," said Charles de Vaulx of International Value Advisers, a New York-based investment firm. "It's so universally hated, yet it might be one of the world's best-performing markets over the next five years."
Or, then, again, it might not. But the point is that all investors hate Japan.
"So many Japanese companies are well managed from an industrial standpoint," he said.
Yeah, but who cares about that?
... An attraction for the bulls is the fire-sale prices. Although the benchmark Nikkei recently hit a nearly 10-month high, it is still more than two-thirds off its peak before Japan's real estate and stock market bubble burst in 1990.
Shares in Tokyo are also about 20 percent off their levels before the financial crisis hit in 2008 - one of the few major markets that have yet to rebound. ...
Certainly Japan can still give investors reasons for doubt - like the long-term effects of the government's high debt and aging population. There is also the paltry profitability of companies like Sony, which has averaged a 3 percent return on equity over the last five years while its Korean rival, Samsung Electronics, has surpassed 13 percent by the same measure....
More Japanese companies have also tried to counter investors' longstanding complaints that companies here hoard too much cash, instead of investing it or returning it to shareholders.
...Some activist investors, meanwhile, are trying to coax Japanese companies into creating more value for shareholders, rekindling an issue that ignited contentious battles between foreign investors and Japanese management in the mid-2000s.