Thirty years ago this Thursday, a large number of Japanese individuals began investing in stocks when Nippon Telegraph and Telephone was listed on the Tokyo Stock Exchange. How those investments have fared differs depending on when the shares were bought.
In two months after debuting on the exchange, the value of NTT shares soared 2.7 times compared with their initial public offering price. Encouraged by an acquaintance who had earned a handsome profit on the stock, one government employee in southwestern Kumamoto Prefecture decided to buy 6 million yen ($53,500 at current rates) worth of the shares.
But Japan's economic bubble burst a few years later, causing him an unrealized loss of up to 4 million yen on the investment. Today, NTT's stock price is only one-third of its peak. The man finally sold his NTT shareholdings last June, at a loss.
A similar generational difference can be seen with regard to Japanese people's views on stock investment in general. According to a survey by Sparx Asset Management, 46% of respondents in their 20s have a favorable image of stock investment. The ratio is only around 30% among people older than 40, who directly experienced the bursting of Japan's bubble economy.
The difference has to do with whether or not people have had successful investment experiences. Suppose that a person began investing at any given point in the past 30 years and held on to a financial product linked to the Nikkei Stock Average until the end of 2016. If the investment started between the end of 1986 and the end of 1996, it resulted in losses in almost all years. But if it started after the end of 1997, it posted double-digit gains in most years.
In the U.S., stock prices took 25 years to return to the level before the Wall Street crash of 1929. In other words, individual investors needed roughly a generation to overcome the sense that stock investments were unprofitable.
The generational difference in views on stock investing cannot be erased easily, but a new generation of investors is emerging. Having come of age after 2000, they are known as "millennial" investors, and they make full use of the internet for investment.
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