Japanese stock prices in 1989 reflected the expectation of very high economic growth almost indefinitely. Put differently, Japanese stock price/earnings ratios in the 1989 era were very, very high (well over 100). The only U.S. parallels I can think of in the last 60 years are the high-tech bubble (circa 1998 – 1999) and a narrower list of extremely popular stocks in today’s stock market. Stocks with such high valuations frequently disappoint investors sooner or later, since trees don’t grow to the sky. In more economic terms, intense worldwide competition usually dents the outlook for previous favorites, and new or recommitted companies frequently become successful by exploiting the weaknesses of the last generation of winners. Yesterday’s predators become today’s prey.