1 00:00:01,040 --> 00:00:05,000 Speaker 1: You're listening to a Sheersis podcast. Do you think the 2 00:00:05,120 --> 00:00:08,960 Speaker 1: US stock market is doing unusually well or other market's 3 00:00:09,000 --> 00:00:11,920 Speaker 1: doing unusually badly? Talk to me about that. 4 00:00:12,600 --> 00:00:15,960 Speaker 2: Yeah. So, although the US is the market that's had 5 00:00:16,040 --> 00:00:19,400 Speaker 2: most of the headlines so far this year, it's actually 6 00:00:19,400 --> 00:00:23,880 Speaker 2: the second largest country in the world that's actually done better. 7 00:00:24,720 --> 00:00:27,720 Speaker 2: So the second largest country in the index is actually Japan. 8 00:00:28,000 --> 00:00:32,519 Speaker 2: But actually so far this year, Japan has actually delivered 9 00:00:32,560 --> 00:00:37,839 Speaker 2: a higher return than the US stock market. The problem 10 00:00:37,840 --> 00:00:40,720 Speaker 2: with the Japanese sheer market all time high is the 11 00:00:40,760 --> 00:00:44,879 Speaker 2: high that they hit this year was a relative to 12 00:00:44,960 --> 00:00:48,880 Speaker 2: nineteen eighty nine. Okay, all right, so it's thirty five 13 00:00:49,040 --> 00:00:53,840 Speaker 2: years in other words, of a zero nominal return. You know, 14 00:00:53,920 --> 00:00:58,960 Speaker 2: we're not even talking about talking about kind of really justable. Look, 15 00:00:59,000 --> 00:01:01,600 Speaker 2: I'm not going to draw that analogue to today in 16 00:01:01,640 --> 00:01:06,520 Speaker 2: the US. Like the valuations in Japan were just just 17 00:01:06,680 --> 00:01:10,880 Speaker 2: absolutely unheard of and they haven't really been tested since 18 00:01:11,480 --> 00:01:14,200 Speaker 2: on a price to earnings multiple basis. The only thing 19 00:01:14,280 --> 00:01:16,679 Speaker 2: close was the was the tech level in the US. 20 00:01:17,480 --> 00:01:22,959 Speaker 2: But it's just a really good example of conventional wisdom 21 00:01:23,000 --> 00:01:26,000 Speaker 2: back then was you know, Japan was the future and 22 00:01:26,360 --> 00:01:30,240 Speaker 2: it didn't transpire. Interesting with Japan today, it does look 23 00:01:30,400 --> 00:01:33,280 Speaker 2: like and a key reason their market is rarely is 24 00:01:33,319 --> 00:01:39,720 Speaker 2: one there's reforms around shareholder returns. So you know, Japanese 25 00:01:39,760 --> 00:01:44,120 Speaker 2: companies were quite benevolent and you know, really took great 26 00:01:44,120 --> 00:01:47,200 Speaker 2: care of their employees, which is a good thing nice, 27 00:01:47,240 --> 00:01:52,800 Speaker 2: but would enter we do expenditure with expectations of really 28 00:01:52,880 --> 00:01:54,400 Speaker 2: low returns on capital. 29 00:01:54,680 --> 00:01:57,680 Speaker 1: So if Japan is being a little bit less benevolent, 30 00:01:58,400 --> 00:02:01,040 Speaker 1: is the reason the US economy and therefore it's share 31 00:02:01,040 --> 00:02:04,360 Speaker 1: market to a certain degree, is our performing because the 32 00:02:04,480 --> 00:02:08,600 Speaker 1: US is not so malevolent. Perhaps they're better capitalists, perhaps 33 00:02:08,639 --> 00:02:10,639 Speaker 1: more malevolent. You might even say. 34 00:02:12,240 --> 00:02:15,360 Speaker 2: There is some truth in that. If you look at 35 00:02:15,560 --> 00:02:20,359 Speaker 2: the share of a company's profit that goes to labor 36 00:02:20,919 --> 00:02:24,320 Speaker 2: versus what goes to the shareholders, and that is over 37 00:02:24,320 --> 00:02:28,079 Speaker 2: the past couple of decades in the US fallen, so 38 00:02:28,440 --> 00:02:30,840 Speaker 2: so a bigger share of the gains have gone to 39 00:02:30,880 --> 00:02:36,320 Speaker 2: capital over labor. More nearer term. What's quite interesting is 40 00:02:36,360 --> 00:02:40,160 Speaker 2: that some of the larger companies in the US, you'll 41 00:02:40,200 --> 00:02:44,880 Speaker 2: probably say they weren't great capitalists. And I'm talking specifically 42 00:02:44,919 --> 00:02:49,960 Speaker 2: about some of the large tech companies. So going into 43 00:02:50,240 --> 00:02:56,960 Speaker 2: the say two they had a decade of just rarely 44 00:02:57,000 --> 00:03:01,920 Speaker 2: really check money easy to get around away with regards 45 00:03:02,000 --> 00:03:06,079 Speaker 2: to raising capital, and money was cheap, right, you know, 46 00:03:06,120 --> 00:03:09,760 Speaker 2: we had interstratets pretty much zero, and that meant that 47 00:03:09,880 --> 00:03:13,440 Speaker 2: actually there was a lot of fat in those businesses, right, 48 00:03:13,760 --> 00:03:18,320 Speaker 2: you know, think of Meta, Think of why it's called 49 00:03:18,320 --> 00:03:21,080 Speaker 2: Meta because they were chucking so much money into the 50 00:03:21,120 --> 00:03:26,840 Speaker 2: metaverse and it wasn't exactly delivering any shareholder returns. So 51 00:03:26,919 --> 00:03:29,360 Speaker 2: actually part of the gains that you've seen in the 52 00:03:29,440 --> 00:03:33,640 Speaker 2: US share market, I think, particularly in twenty twenty three 53 00:03:33,760 --> 00:03:38,600 Speaker 2: in twenty twenty four, has actually them been better capitalists. 54 00:03:38,640 --> 00:03:42,240 Speaker 2: So I will use Meta as an example again because 55 00:03:42,280 --> 00:03:51,240 Speaker 2: they managed to gain deliver strong profits while reducing their workforce. 56 00:03:51,680 --> 00:03:55,400 Speaker 2: Investing involves risk. You might lose the money you start with. 57 00:03:55,880 --> 00:03:59,560 Speaker 2: We recommend talking to a licensed financial advisor. We also 58 00:03:59,640 --> 00:04:03,600 Speaker 2: recommend and reading product of scosure documents before deciding to invest.