WEBVTT - Quick Bite: The Japanese stock market hit all time high in 2024

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<v Speaker 1>You're listening to a Sheersis podcast. Do you think the

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<v Speaker 1>US stock market is doing unusually well or other market's

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<v Speaker 1>doing unusually badly? Talk to me about that.

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<v Speaker 2>Yeah. So, although the US is the market that's had

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<v Speaker 2>most of the headlines so far this year, it's actually

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<v Speaker 2>the second largest country in the world that's actually done better.

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<v Speaker 2>So the second largest country in the index is actually Japan.

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<v Speaker 2>But actually so far this year, Japan has actually delivered

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<v Speaker 2>a higher return than the US stock market. The problem

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<v Speaker 2>with the Japanese sheer market all time high is the

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<v Speaker 2>high that they hit this year was a relative to

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<v Speaker 2>nineteen eighty nine. Okay, all right, so it's thirty five

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<v Speaker 2>years in other words, of a zero nominal return. You know,

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<v Speaker 2>we're not even talking about talking about kind of really justable. Look,

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<v Speaker 2>I'm not going to draw that analogue to today in

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<v Speaker 2>the US. Like the valuations in Japan were just just

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<v Speaker 2>absolutely unheard of and they haven't really been tested since

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<v Speaker 2>on a price to earnings multiple basis. The only thing

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<v Speaker 2>close was the was the tech level in the US.

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<v Speaker 2>But it's just a really good example of conventional wisdom

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<v Speaker 2>back then was you know, Japan was the future and

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<v Speaker 2>it didn't transpire. Interesting with Japan today, it does look

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<v Speaker 2>like and a key reason their market is rarely is

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<v Speaker 2>one there's reforms around shareholder returns. So you know, Japanese

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<v Speaker 2>companies were quite benevolent and you know, really took great

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<v Speaker 2>care of their employees, which is a good thing nice,

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<v Speaker 2>but would enter we do expenditure with expectations of really

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<v Speaker 2>low returns on capital.

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<v Speaker 1>So if Japan is being a little bit less benevolent,

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<v Speaker 1>is the reason the US economy and therefore it's share

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<v Speaker 1>market to a certain degree, is our performing because the

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<v Speaker 1>US is not so malevolent. Perhaps they're better capitalists, perhaps

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<v Speaker 1>more malevolent. You might even say.

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<v Speaker 2>There is some truth in that. If you look at

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<v Speaker 2>the share of a company's profit that goes to labor

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<v Speaker 2>versus what goes to the shareholders, and that is over

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<v Speaker 2>the past couple of decades in the US fallen, so

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<v Speaker 2>so a bigger share of the gains have gone to

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<v Speaker 2>capital over labor. More nearer term. What's quite interesting is

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<v Speaker 2>that some of the larger companies in the US, you'll

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<v Speaker 2>probably say they weren't great capitalists. And I'm talking specifically

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<v Speaker 2>about some of the large tech companies. So going into

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<v Speaker 2>the say two they had a decade of just rarely

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<v Speaker 2>really check money easy to get around away with regards

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<v Speaker 2>to raising capital, and money was cheap, right, you know,

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<v Speaker 2>we had interstratets pretty much zero, and that meant that

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<v Speaker 2>actually there was a lot of fat in those businesses, right,

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<v Speaker 2>you know, think of Meta, Think of why it's called

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<v Speaker 2>Meta because they were chucking so much money into the

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<v Speaker 2>metaverse and it wasn't exactly delivering any shareholder returns. So

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<v Speaker 2>actually part of the gains that you've seen in the

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<v Speaker 2>US share market, I think, particularly in twenty twenty three

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<v Speaker 2>in twenty twenty four, has actually them been better capitalists.

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<v Speaker 2>So I will use Meta as an example again because

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<v Speaker 2>they managed to gain deliver strong profits while reducing their workforce.

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<v Speaker 2>Investing involves risk. You might lose the money you start with.

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<v Speaker 2>We recommend talking to a licensed financial advisor. We also

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<v Speaker 2>recommend and reading product of scosure documents before deciding to invest.