Another very interesting chart from financial advisor Doug Short (dshort.com), this time overlaying the S&P 500 and Japan’s Nikkei by lining up the peaks. As you can see, following the peak, the two have looked pretty different, with the S&P 500 having made a meaningful second peak, whereas the Nikkei did not.
The difference is simple:
A key difference is the fact that Japan experienced nearly simultaneous bubbles in equities and real estate; the former peaked in December 1989, the latter in early 1991. The equity and real estate peaks in the US were separated by approximately five years, and the 2005 peak wasn’t generally recognised for another year or two because of the highly regional nature of the real estate market.
Separately, here’s a good post from Winterspeak on the absurdity of thinking we’ll face a Zimbabwe-like hyperinflation scenario, when Japanese-style deflation is clearly what’s playing out.