The greatest bubble of all time

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Thinking and acting long-term, for the long-term, is one of the few edges remaining in the markets. Bring up this idea and there will almost always be someone waiting to take the other side with the ‘what about Japan?’ argument. Japan’s two-and-half decade economic and market struggles make for some important lessons but most investors seem to have the wrong takeaways. Never underestimate how far people can take the markets to the extremes. This works in both directions. The pendulum swings back and forth but always seems to go further than most would assume is possible. Between 1956 to 1986, land prices increased 5000% even though consumer prices only doubled in that time. In the 1980s share prices increased 3x faster than corporate profits for Japanese corporations, and by 1989 the P/E ratio on the Nikkei was 60x trailing 12 month earnings. In this article, Ben Carlson lists six important lessons from Japan's bubble that most investors always forget: (VIEW LINK)


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