I often find myself wondering if the US is running the same course as 1990s Japan. Low interest rates, sluggish growth, growing government debt, and an aging population due its entitlements. Take a look at the chart below:
This view was fairly commonplace in the early stages of the recession, but the popular media stopped running comparison articles in the past year or so. I don’t read too much into this. Most importantly, this chart has little in common with the S&P 500 since its peak. US stocks nearly reached their prior highs before their most recent swoon. Japan has more in common with the Nasdaq chart post-2001 bubble. I won’t post that one here because it brings back so many bad memories for US investors. If I were a betting man, I would put my money on the Nasdaq reaching its 2001 high before Japan reaches 1990 again. But I don’t gamble.