Japan
and its stock market have been a tough sell for the better part of two
decades - and with good reason. Nearly a generation after the collapse of its property and market bubbles in the late 1980s, the
country remains hobbled by soaring
deficits, debt and periodic bouts of deflation and despair.
There
was a time when economists regarded Japan as an anomaly among developed countries - a thankfully rare example of
what can happen when timid politicians face an overwhelming financial and
economic crisis armed with ineffective policies and an unwillingness or
inability to tackle contentious fiscal, banking and market reforms.
But
after the numerous policy missteps and sharp reversals of fortune of the past
few years in Europe and the United States, we now know that Japan has not
cornered the market on official ineptitude
or rabbit-caught-in-the-headlights fear. We also know that the Japanese
experience is quite likely to be repeated elsewhere, as economic actors shed
debt. As the Economist observed recently, "the euro area looks eerily
Japanese."
For the
ever-shrinking band of hardy investors still committed to equities, such conditions demand
extreme caution. Which is where Toronto-based Burgundy Asset Management comes
in. The conservative value shop has been wading into Japanese stocks for the
past 14 years of bad and worse times and offers up some hard-earned lessons
for a world that is turning Japan-like.
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VOCABULARY
1.
Collapse - a sudden decrease in
the value of something
2.
market bubbles - It could also be described as a trade
in products or assets with inflated values
3.
hobbled - to deliberately make sure that a
plan, system etc cannot work successfully
4.
anomaly - something that is noticeable because
it is different from what is usual
5.
ineptitude - lack of skill
6.
equities - shares in a company
from which the owner of the shares receives some of the company's profits
rather than a fixed regular payment
QUESTIONS FOR DISCUSSION
1.
Explain
“Not all companies sink in hard times”
in your own words.
2.
Define
economic bubble or market bubble.
3.
Discuss
some business practices in your country.
