You're listening to a Sheersis podcast. Do you think the US stock market is doing unusually well or other market's doing unusually badly? Talk to me about that.
Yeah. So, although the US is the market that's had most of the headlines so far this year, it's actually the second largest country in the world that's actually done better. So the second largest country in the index is actually Japan. But actually so far this year, Japan has actually delivered a higher return than the US stock market. The problem with the Japanese sheer market all time high is the high that they hit this year was a relative to
nineteen eighty nine. Okay, all right, so it's thirty five years in other words, of a zero nominal return. You know, we're not even talking about talking about kind of really justable. Look, I'm not going to draw that analogue to today in the US. Like the valuations in Japan were just just absolutely unheard of and they haven't really been tested since on a price to earnings multiple basis. The only thing close was the was the tech level in the US.
But it's just a really good example of conventional wisdom back then was you know, Japan was the future and it didn't transpire. Interesting with Japan today, it does look like and a key reason their market is rarely is one there's reforms around shareholder returns. So you know, Japanese companies were quite benevolent and you know, really took great care of their employees, which is a good thing nice, but would enter we do expenditure with expectations of really low returns on capital.
So if Japan is being a little bit less benevolent, is the reason the US economy and therefore it's share market to a certain degree, is our performing because the US is not so malevolent. Perhaps they're better capitalists, perhaps more malevolent. You might even say.
There is some truth in that. If you look at the share of a company's profit that goes to labor versus what goes to the shareholders, and that is over the past couple of decades in the US fallen, so so a bigger share of the gains have gone to capital over labor. More nearer term. What's quite interesting is that some of the larger companies in the US, you'll probably say they weren't great capitalists. And I'm talking specifically
about some of the large tech companies. So going into the say two they had a decade of just rarely really check money easy to get around away with regards to raising capital, and money was cheap, right, you know, we had interstratets pretty much zero, and that meant that actually there was a lot of fat in those businesses, right, you know, think of Meta, Think of why it's called Meta because they were chucking so much money into the
metaverse and it wasn't exactly delivering any shareholder returns. So actually part of the gains that you've seen in the US share market, I think, particularly in twenty twenty three in twenty twenty four, has actually them been better capitalists. So I will use Meta as an example again because they managed to gain deliver strong profits while reducing their workforce. Investing involves risk. You might lose the money you start with.
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