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Putting the New Japanese Stock Bubble in Perspective

John Maxfield
June 4, 2013

Spotting bubbles is hard but not impossible.

Take a look at this chart of the Nikkei (NIKKEIINDICES: ^NI225), the principal stock index in Japan. As you can see, it shot up by more than 80% in a period of only six months.

It should go without saying that corporate fundamentals had little to do with this trend; it was instead the result of politics. In the middle of last December, Shinzo Abe, president of the Liberal Democratic Party, secured a landslide victory to become Prime Minster. He did so by promising to get