In 1989, the safe bet was Japan

At the start of 1989, Japan was 40% of the global stock market, against 29% for the US (Dimson, Marsh, Staunton, UBS Global Investment Returns Yearbook 2024). On 29 December 1989, the Nikkei 225 closed at 38,915.87. It took until 22 February 2024 to close higher, 34 years later (Bloomberg). With dividends reinvested, the wait lasted 31 years, until February 2021 (Nikkei Inc.).

The 1989 arguments were strong: an industry that dominated electronics and cars, banks among the largest in the world, growth the rest of the world envied. Yet the market traded at up to 70.9 times earnings (French and Poterba, 1991). The Japanese economy kept producing; it was the entry price that cost three decades.

At the end of September 2026, the US made up 72.9% of the MSCI World index (MSCI). Shiller's CAPE for the US market stood at 41.1 on 21 October 2026, a level seen only once before since 1871, in 1999-2000 (multpl, Shiller data). History does not say the US will follow Japan. It says that a market's dominance, even when earned, does not protect the investor who buys it too dear.

At the start of 2024, Japan was about 6% of the world market.