You have to be careful drawing parallels between our current bubble here in the U.S. and Japan’s bubble of the late-80s. Remember, at the peak of Japan’s bubble, the Nikkei traded at over 100x peak earnings and there was commercial real estate being valued at $150,000/sq.ft. (you read that right). The few square miles around the Imperial Palace in Tokyo were worth more than the entire state of California.
We have a bubble. And the aftermath will be painful. But I wouldn’t bet on real estate or stock market values being lower in 15 years than where they are today, although investors are probably going to be extremely disappointed with returns on these asset classes over that period.
