The charts below, comparing American and Japanese bear markets, are some of the better ones I’ve seen (source: dshort.com). Comparisons between the US’s current crisis to Japan’s are nothing new, of course. But these charts offer some unique angles, indexes, and timelines. Also, the second chart adjusts for inflation, with interesting results.

This first chart compares 4 bear markets, on a 10-year timeline:

  • Nikkei 225 (Japan’s main index) 1989-1999
  • S&P 500 from 2007-present
  • Dow 1929-1939
  • Nasdaq 2000-present. Click to enlarge:

japan-us-comparison

Inflation-Adjusted: S&P 500 peaked in March 2000

The next chart uses the same indexes, but adjusts for inflation.  The author points out that the S&P 500 reached its true peak in March of 2000. When adjusted for inflation, the S&P’s 2007 numerical “high” is actually 16% lower than 2000’s. This version’s timeline is also extended to 20 years.

japan-us-infla-adj

Food for thought. Our situation is unique, of course. Like every economic disaster: Unique demographics, debt, industry, political remedies, currency factors, etc. But these charts are still valuable. They show how long bear markets can last, and how dramatic the bear-rallies can be.

Some would argue that they also show the results of following in Japan’s footsteps. I don’t agree with the sustained-deflation argument, as stated here. But a lot of smart people do think our “eternal life-support for zombie-banks” policies will lead us into a similar period of stagnation.

The author of the above charts has more commentary here. I just discovered dshort.com, but it seems like a nice resource. Apparently the author provides regular updates for these charts, and tweaked versions of it on occasion.

Disclosure: No positions in any companies/stocks mentioned.