When, in 2011, I last came to Japan, the Nikkei 225 index was at the bottom of a long bear market, having fallen by 75% in 22 years. Periodic rallies had not been sustained as, it was commonly agreed, most Japanese companies were not run for profit. Protected from shareholders and predators by cross-holdings, boards focused on themselves and staff loyalty.
Government bonds yielded just 1.25%, the lowest in the world, which seemed absurdly overvalued given Japan’s high government debt relative to the size of the economy. Many had sold bonds short in the expectation of higher yields but this trade became known as “the widowmaker” as it had persistently failed.
