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The World Market for Bonds and Stocks

In: The New International Money Game

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  • Robert Z. Aliber

    (University of Chicago)

Abstract

One way to answer these questions is to rely on anecdotes, and particularly the stories of the market participants. An alternative approach is to rely on economic intuition. A third is to scan the data. The answers to both questions are more ambiguous than they seem. Consider the answer to the second question at the end of 1989. Investors who owned Japanese shares had a much higher rate of return than investors who owned shares of firms headquartered in other industrial countries over the previous 10 years, the previous 20 years, and even the previous 30 years. The high rates of return on Japanese stocks reflected primarily the sharp increase in prices of stocks traded in Tokyo; Americans and other non-Japanese that owned these stocks had an even higher rate of return because the yen had appreciated by an average annual rate of 4–5 percent a year between 1970 and 1989.

Suggested Citation

  • Robert Z. Aliber, 2011. "The World Market for Bonds and Stocks," Palgrave Macmillan Books, in: The New International Money Game, edition 0, chapter 18, pages 260-267, Palgrave Macmillan.
    • Handle: RePEc:pal:palchp:978-0-230-24672-0_19
    DOI: 10.1057/9780230246720_19
    as

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