S&P 500 VS NIKKEI 225

By Spencer

Just a little different way of looking at the data. One of the constant comments is that stock plunges like this are buying opportunities because markets always come back. Obviously, the people saying this are not including the Japanese stock market in their sample. The Nikkei 225 is now almost back to where it was in 1981 and has never made any attempt to regain its 1989 peak.

Yes, I know there were massive differences in valuations at the peaks, but the S&P 500 valuation at the 2000 peak was also completely outside the range of historic experience.

While we are in the middle of a crises and everyone’s comments are centered on it, one of the more interesting things no one is talking about is how this plunge demonstrates that the shift from defined benefit pension plans to defined contribution plans was a major pay cut for middle class Americans. It shifted the market risks from the corporate balance sheet to the individual.

Interesting how all those writing about the growth of fringe benefits fail to bring this up.