Speaker 1: You're listening to a Sheersis podcast. Do you think the
Speaker 1: US stock market is doing unusually well or other market's
Speaker 1: doing unusually badly? Talk to me about that.
Speaker 2: Yeah. So, although the US is the market that's had
Speaker 2: most of the headlines so far this year, it's actually
Speaker 2: the second largest country in the world that's actually done better.
Speaker 2: So the second largest country in the index is actually Japan.
Speaker 2: But actually so far this year, Japan has actually delivered
Speaker 2: a higher return than the US stock market. The problem
Speaker 2: with the Japanese sheer market all time high is the
Speaker 2: high that they hit this year was a relative to
Speaker 2: nineteen eighty nine. Okay, all right, so it's thirty five
Speaker 2: years in other words, of a zero nominal return. You know,
Speaker 2: we're not even talking about talking about kind of really justable. Look,
Speaker 2: I'm not going to draw that analogue to today in
Speaker 2: the US. Like the valuations in Japan were just just
Speaker 2: absolutely unheard of and they haven't really been tested since
Speaker 2: on a price to earnings multiple basis. The only thing
Speaker 2: close was the was the tech level in the US.
Speaker 2: But it's just a really good example of conventional wisdom
Speaker 2: back then was you know, Japan was the future and
Speaker 2: it didn't transpire. Interesting with Japan today, it does look
Speaker 2: like and a key reason their market is rarely is
Speaker 2: one there's reforms around shareholder returns. So you know, Japanese
Speaker 2: companies were quite benevolent and you know, really took great
Speaker 2: care of their employees, which is a good thing nice,
Speaker 2: but would enter we do expenditure with expectations of really
Speaker 2: low returns on capital.
Speaker 1: So if Japan is being a little bit less benevolent,
Speaker 1: is the reason the US economy and therefore it's share
Speaker 1: market to a certain degree, is our performing because the
Speaker 1: US is not so malevolent. Perhaps they're better capitalists, perhaps
Speaker 1: more malevolent. You might even say.
Speaker 2: There is some truth in that. If you look at
Speaker 2: the share of a company's profit that goes to labor
Speaker 2: versus what goes to the shareholders, and that is over
Speaker 2: the past couple of decades in the US fallen, so
Speaker 2: so a bigger share of the gains have gone to
Speaker 2: capital over labor. More nearer term. What's quite interesting is
Speaker 2: that some of the larger companies in the US, you'll
Speaker 2: probably say they weren't great capitalists. And I'm talking specifically
Speaker 2: about some of the large tech companies. So going into
Speaker 2: the say two they had a decade of just rarely
Speaker 2: really check money easy to get around away with regards
Speaker 2: to raising capital, and money was cheap, right, you know,
Speaker 2: we had interstratets pretty much zero, and that meant that
Speaker 2: actually there was a lot of fat in those businesses, right,
Speaker 2: you know, think of Meta, Think of why it's called
Speaker 2: Meta because they were chucking so much money into the
Speaker 2: metaverse and it wasn't exactly delivering any shareholder returns. So
Speaker 2: actually part of the gains that you've seen in the
Speaker 2: US share market, I think, particularly in twenty twenty three
Speaker 2: in twenty twenty four, has actually them been better capitalists.
Speaker 2: So I will use Meta as an example again because
Speaker 2: they managed to gain deliver strong profits while reducing their workforce.
Speaker 2: Investing involves risk. You might lose the money you start with.
Speaker 2: We recommend talking to a licensed financial advisor. We also
Speaker 2: recommend and reading product of scosure documents before deciding to invest.