If you invest in the stock markets and recently you’ve had to check your portfolio with a stiff drink, at least you’re not alone. According to the FT:
Stock markets finished their worst quarter in more than five years on Monday with further losses as investors continued to favour less risky assets.
The losses have seen many equity markets enter bear market territory – a fall of 20 per cent from recent peaks – over the last three months as a result of deepening fears about a US recession and continued tensions in credit markets.
For the UK’s FTSE 100, the S&P 500 index in the US and the pan-European FTSE Eurofirst 300, this was the worst quarterly performance since the third quarter of 2002, when accounting scandals at Enron and WorldCom sparked a global equity sell-off.
Of course, if you’re buying shares for the long-term than this is good news, although I agree it doesn’t always feel like it. Cheaper is better, remember?
In particular, Japan now looks seriously under-valued. The Nikkei 225 Average lost 2.3 per cent on the day, and finished at 12,525.54, down 17.4 per cent on the quarter. It was up at 18,000 just a year or two ago, and around 40,000 at its late 1980s peak.
The trouble with Japan is companies pay very low dividends, which makes it impossible to construct a dividend-based portfolio. This means you have to sit around hoping the index goes up again, with no income in-between. An expensive waste of time, recently.
I have been reading in MoneyWeek Magazine that Japan (especially Small Cap) is a good investment as a lot of the shares are listed below book value.
@David: 2024 and 37% of Nikkei constituents still trade below book value, compared with ~3% of stocks in the S&P 500. Equities account for just 11% of household financial assets in Japan, compared with 39% in the US and 21% in Europe. Investment funds add another 4% but in the US that number is 12% and in Europe it is 10%. In contrast, Japanese households hold over half their assets in cash.
This guy has a whole blog on seemingly unbelievably cheap Japanese shares:
https://altaycap.substack.com/p/asagami-corporation-tyo-9311-is-an