The outcome of the Iranian conflict is likely to be messy and long drawn out, so let me concentrate on how to invest amid the turbulence.
After three lost decades, the Japanese stock market has recovered with a roar in the last three years. After the spectacular bursting of the Japanese asset price bubble in 1990, the first decade saw the Nikkei 225 index drop from a 1989 peak of 39,000 to 7,600 in the following decade, with a brief recovery to 18,000 before plunging to 7,000 during the 2008 Global Financial Crisis. When right-wing Prime Minister Shinzo Abe introduced massive reflation (quantitative and qualitative easing) in 2013, the Nikkei recovered to 24,000 in 2016 but did not break the 1989 record high until February 2024.
Today, the Japanese economy is still growing only at a paltry 0.7% in 2026 (International Monetary Fund or IMF estimate), with a weak yen against the US dollar at 157. However, over the last two years, the Nikkei reached a peak of 59,332 but has since dropped following the killing of Iranian leader Ayatollah Ali Hosseini Khamenei, to 54,245.
