29 January 2016: The Bank of Japan goes negative
The Bank of Japan surprised markets by introducing a negative interest rate on some bank reserves, joining several European central banks in the strange world of paying to park money. The goal was to weaken the yen and spur lending. Within days the yen was strengthening instead and bank shares slumped. Negative rates were supposed to be temporary; in Japan they lasted until 2024.
The lesson: Monetary experiments can produce the opposite of what was intended, and last far longer than planned.
What it meant for investors
$1,000 in Nikkei 225 at the start of 2018 → $2,128 today, vs $2,519 in the S&P 500.
We start the clock at the start of 2018, the first year in our price data after the event. That is 2.1 times the money, but $391 less than a plain index fund made over the same years.
What Nikkei 225 teaches: Even a large developed market can fail to reach its old peak for a generation, which is why buying at bubble valuations is dangerous for patient investors too.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $17,400 | $2,874 | $3,301 |
| 2018 | $23,500 | $2,128 | $2,519 |
| 2020 | $23,600 | $2,119 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Nikkei 225? Every starting year and the full story →
More Nikkei 225 history
- 11 March 2011: Japan's earthquake and tsunami
- 22 September 1985: The Plaza Accord takes down the dollar
- 17 November 1997: A major Japanese bank collapses
- 24 November 1997: Yamaichi Securities collapses
- 29 December 1989: The Nikkei hits its all-time bubble peak
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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