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Taming the Lion: 100 Secret Strategies for Investing by Richard Farleigh

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5. Big Ideas

5.0 Markets are slow to react to structural influences

In the early 1990s, I was asked for my view on the Nikkei - the Japanese share market index. I replied that I was in no way optimistic, partly because of the weak banking sector which had too many bad loans. I vividly remember the response: “No, no. That’s old news.” But I was right, and even ten years later, the banking sector’s problems persisted, and the Nikkei was dragged lower and lower. The weak banking sector was a structural influence on the Japanese markets, and I don’t believe that these things disappear in a hurry. Even the biggest markets in the biggest economies can take a long time to react to the biggest news.

Structural influences

Structural influences ...

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