The attached chart compares log Nikkei 225 and SP500, adjusted in time such that the SP500 high in 2000 aligns with the NIK high in 1989. For comparison purposes, log SPX was also scaled by 1.44X, so that the peak values of both indices are the same value.

The first decade of Japan's lost decade was characterized by more high-frequency volatility in stock returns than the first decade of our lost decade. Japan lost ground over their first lost decade, while we have held up pretty well. Compared to the Nikkei, the SP500 rose faster to its 2000 peak, then experienced two large peaks and two deep dips. This shows that our central bank is better than theirs, if the goal for investors is lower frequency and greater amplitude.

The next lost decade of our lost decade is still to be determined, but for the sake of our entitled youth hopefully the path will differ from Japan's.


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