Past Investment Opinions
1990-1999 / Positive stance on the return to health of the U.S. economy and investing in U.S. equities ⇒ CORRECT
< Reasons >
- Belief in the efficiency of the U.S. restructuring process and the faith of the U.S. public in capitalism that was behind this restructuring
- The power of the information revolution led by the United States
Since May 1999 / Criticism of the “bubble economy” ⇒ CORRECT
< Reasons >
Problems involving the U.S. Internet valuation bubble and the self-fulfilling increases in ROE backed by rising stock prices
1997-2002 / Negative outlook for Japanese equities ⇒ CORRECT
< Reasons >
- Large volume of hidden non-performing loans (financial assets that produce no cash flows) in the financial sector
- Decline in Japan’s global presence due to strengthening economies in other Asian countries
- Unreasonably high expectations for returns on investments
Oct. '02 - May '03 / Switch to medium/long-term positive outlook for Japan ⇒ CORRECT
< Reasons >
- Japanese government established an effective system to deal with non-performing loans
- Attractive valuations of Japanese equities
2005 / Very positive stance regarding Japanese and U.S. equities ⇒ CORRECT
< Reasons >
- Belief that the world was entering a golden age backed by globalization and the Internet revolution
- Extremely low valuations of Japanese equities
Since July 2007 / Consistent positive outlook for Japanese equities ⇒ BIG MISTAKE
< Reasons >
- Failure to recognize the magnitude of financial crisis originating with subprime loans
- Inability to foresee the catastrophic breakdown in supply-demand that caused financial markets to collapse
- Failure to anticipate the destructive power of the market collapse and the speed at which the shock waves expanded; inadequate insight concerning the impact of the market collapse on the real economy
Since Mar. 2009 / Start global equity bull market ⇒ Correct so far for US
< Reasons >
- Could not predict weakness of Japan equity with ext ream yen strength
- Under estimate difficulty accompanied by secular turning period of US equity
Since Nov. 2012 / Start Japan equity long-term bull market ⇒ orrect so far
< Reason >
- The shift in monetary policy ended the Yen's strength and deflation