Most of the investors across the globe having single important Q, that is how much more and how long it will take US to bottom out? In order to find answer to this qustion when we look at history we find that, US can learn from Japan experiences. [ As you know, Japan was under deflation from last 20 years, Japan's stock market picked in late 80's were still not able to regain its peak after ~ 20 years or more].
It doesn't mean that economies like India/China did not do well when Japan was under slowdown and deflation. So, analysis here is applicable to developed nations, India/China will continue to grow and will be the best destination for any free cash.
In the absence of developed countries for wealth creation India as a young emerging nation will become the best place to be in the best time. Indian people will see their golden during next 10-15 years as suggested by Nandan too.
US can learn from Japan:-
- Using the Japan Nationwide Land Prices Chart as shown above, it will take another 4-5 years for US to see its housing prices bottomed.
- Housing prices are now one notch closer to their final destination. At the current pace, it will take another 3-5 years before housing bottoms in the US vs. 14 years in Japan.
- It is also expected that the UK, Canada, and Australia to follow similar paths, offset only by the start of their respective housing busts.
- There is every reason to believe US banks will face the same experience of paying down debts in a Zero Interest Rate world as opposed to going on a lending spree. Some will challenge this notion because of Obama's pledge to create jobs and rebuild infrastructure.
- The counter is that Japan went on a wild spending spree as well, building bridges to nowhere and it did not do Japan any good.
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