After more than three decades investing in Japanese securities, Peter Tasker has little patience for other investors’ self-pity – and he doesn’t want to hear your horror stories from 2008.
“For the last 23 years I've been eating, drinking, sleeping, living ‘bear market,’” Tasker said at a recent lecture. “When we talk about a bear market – a real bear market – what we are talking about is stocks crashing and staying crashed. People are wiped out. I'm not talking a few individuals, I'm talking a generation.”
Tasker is a highly respected analyst whose focus has been on the Japanese market. He is the author of a number of best-selling books on Japan and its economy.
Japan and the lessons of its so-called “lost decade” – which has now long outlived that moniker – were the focus of Tasker’s lecture, which he delivered at a strategy conference hosted by Societe Generale in London last week. He offered hard-learned lessons about what it takes to invest in the kind of persistently dour environment that has prevailed in Japan since the 1990’s, peppered with occasional tongue-in-cheek holier-than-thou admonitions like the one above.
Tasker’s talk covered three major themes: (1) the relevant features of the kind of persistent, post-bubble bear market that Japan has experienced over the past two decades; (2) what strategies make money in such an environment; and (3) common myths and misconceptions about Japan and the headline-grabbing shift that its economic policy has undergone in recent months.
His overarching theme was just how differently a long-term malaise like Japan’s forces you to see the world, and how a patient, survivalist outlook – pessimistic but constantly adaptable – is the key to finding success when market headwinds are unrelenting.
“It's a kind of Stockholm syndrome. After a while it changes you,” Tasker said. “You just get used to it and adapt to it. And as you adapt to it, you create it.”
We’ll hear Tasker’s perspective on recent developments in Japan, but first let’s review how he described the investing philosophy that’s allowed him to find success in the Japanese marketplace – and why he’s proud to declare his kinship with the lowly cockroach.
What “a real bear market” looks like
Tasker began his talk by laying out in more detail the environment he has faced trying to invest in Japan since the bubble burst there.
The clearest illustration of just how bad things have been in Japan, and for just how long, said Tasker, is if you consider a Japanese person who is nearing their 30th birthday. He or she “finds that the stock market is at the same level as when they were born,” Tasker said – the market today is at the same level it reached in 1984.
When an economy crashes as badly as Japan’s did, Tasker said, the effects are wide-ranging and persistent – and they include some consequences you don’t necessarily consider. The Japanese markets for the last 20 years, Tasker said, can be viewed as having experienced “a course of continual decline” – “a deflationary, very low-growth, stagnant environment with a lot of financial risk” – that defies traditional notions of how markets are supposed to work.