22 September 1985: The Plaza Accord takes down the dollar
Finance ministers from the US, Japan, West Germany, France and Britain met at the Plaza Hotel in New York and agreed to push the overvalued dollar lower. It worked, perhaps too well. The yen and the mark soared over the next two years. To offset the strong yen, Japan kept rates low, which helped inflate its giant stock and property bubble of the late 1980s.
The lesson: Currency interventions have long tails; the side effects can show up years later in bubbles.
What it meant for investors
$1,000 in Nikkei 225 at the start of 1990 → $1,316 today, vs $19,429 in the S&P 500.
We start the clock at the start of 1990, the first year in our price data after the event. That is 1.3 times the money, but $18,113 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 |
|---|---|---|---|
| 1990 | $38,000 | $1,316 | $19,429 |
| 1995 | $19,700 | $2,538 | $14,783 |
| 2000 | $19,000 | $2,632 | $4,626 |
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
- 29 January 2016: The Bank of Japan goes negative
- 11 March 2011: Japan's earthquake and tsunami
- 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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