Issues such as the solvency of the financial system, record levels of public debt, lack of firm political leadership and weak domestic demand must all be addressed before Japan's stock market can show signs of sustainable growth. Investors must also ask whether the effects of the asset price bubble that helped the Nikkei 225 index peak at close to 40,000 in the early 1990s have worked their way through the system. Ten years ago, Japan's economic health had become tied to the fortunes of the stock market. The past decade bears testament to the difficulties in expelling the excesses from the system. It all boils down to the level of risk with which you feel comfortable.
Japan is undoubtedly a high-risk play.
So are emerging markets, where growth prospects in the short to medium term are arguably much better. Throughout its 22-year history, Money Observer has never shied away from the issues that effect the fortunes of investors and savers. In December 1991, for example, we advised investors to get out of Maxwell Communications Corporation, months before the group came to an undignified end. And, of course, we have also provided readers with invaluable advice and tips on how to make money, as well as avoid losing it. Next month Money Observer will celebrate its 250th issue.