Is the 25 year bear market in Japan over?

This magazine has been a big bull of Japan, largely since the start of the year and we took the opportunity to add to positions during the late summer sell off that took the index down to the 8600 region. Check out the Japan tab on the right for an overview of our investment case which hinges around the lowest price to book ratio of any developed market, the expectation of a materially weaker yen over the next few years and the lowest PE ratios since the early 80’s.

In looking at the chart above which, although appearing to show that the index is stuck firmly in the middle of its 25 year range and also illustrates just how much the index has fallen from it peaks, looks to us as if it is gearing up for an assault on the key 10,000 level in the New Year. We remain resolutely long and expect the recent global market outperformance to continue through 2013.