On December 29, 1989, the Nikkei Index in Japan hit an all-time high of 38,957. Today, over three decades later, the index trades at 29,174. That is a 1% annual decline for a thirty-year period for a total loss of 25% on a nominal basis. If we took into account the prevailing rate of Japan’s inflation, the index would need to be at 61,880 today just to break even such that the actual purchasing power loss has been 53%.
It has been a totally astounding long-term bout of underperformance. If someone in Japan had to make any type of lump-sum investment in December 1989 to provide for a lifetime of support, the results would have been disastrous as even a withdrawal rate as low as 4.5% would have meant that the money was extinguished within 11 years.
The good news, I suppose, is that most investors do not make singular … Read the rest of this article!
The post Learning From the Nikkei Index’s All-Time High first appeared on The Conservative Income Investor.