30 Years Later, The Nikkei 225 Index is Back Above 30,000
After 30 years, the Japanese Nikkei 225 is above 30,000 and things are a lot different this time around, according to Bloomberg.
The index first passed 30,000 in December 1988 before it crashed in 1990 sending markets tumbling. Back then, trading was done on the floor and in person. Now, individuals can trade instantly from their smartphones.
“Sometimes it took an hour or two just to execute an order,” Taketsugu Agari, a 51-year-old veteran trader and investor. He began his career on the floor. “Now you can just do it yourself on your phone.”
Agari has done well in the markets and has a large following on social media. He believes there are similarities between the Nikkei today and 30 years ago, but doesn't forsee a massive collapse.
“Japan’s market value is small these days compared to globally,” Agari says. He cited the difference in valuations between the largest Japanese stocks, SoftBank and Toyota, and the largest American stocks, Amazon and Apple. He believes investing is more "sensible" these days.
“There was no such thing as calm logic back then. The Nikkei’s price-to-earnings ratio was at 70 at one stage, and people thought that Japan would grow forever,” said Norihito Fujito, 64, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities Co. “Things are different now globally -- even with all the excess liquidity, investors are still calm.”
Agari and Fujito aren't the only experts that see the Nikkei's run-up being more justified this time around.
“It might look like the same path once taken when you look at it on a chart,” said Yoshihiro Ito, 77, chief strategist at Okasan Online Securities Co. “But comparing then and now, the economy, the market and the sentiment, they’re all completely different.”
“While the names are different, there are still a handful of stocks that are driving the index,” Ito said. “The whole thing could still plunge given just a little push.”