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Population Decline And Japan's Stock Market
- In the past 40 years, the annual number of births in Japan has declined from a little over 2 million to a little over 1 million.
- The secular decline in birthrates means fewer consumers and fewer investors. Fewer consumers to fuel the economy at age 30 and fewer investors to bid up stocks at age 40.
- The production of manufactured goods requires significant capital investment. This capital stock must be fully utilized to maximize the investment. The excess capital stock is now a liability.
- Japan's trade imbalance will persist, hurting the economy and stock market. The economy is based in manufactured goods, not commodities. The flow of exported goods cannot be as easily adjusted.
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