Kyushu is as “real Japan” as it gets! The nature here is something else. The food, I’d put it above anything I’ve eaten in Tokyo, and the people here are so much warmer. After ten days traveling around Kyushu, I feel like tourists who stick to the Tokyo-Osaka-Kyoto triangle aren’t really visiting Japan. They’re just tour-bus tourists without the bus.

The island is often called Japan’s forgotten island, and it’s easy to see why. Only about 13% of foreign visitors enter through Kyushu, and its population is shrinking by 0.7% a year. Many say the recent 7.1 quake has cast another shadow over an “already dying island”…

Born in Kumamoto, I know firsthand how resilient Kyushu is, and I’m eager to share my thoughts what will make or break the island’s future. And I’ll throw in some photos from me and my wife’s honeymoon for you to enjoy!

So let’s go through the island properly, starting with its crown jewel:

Fukuoka: Kyushu’s Shining Star

• Population: 1.77 million.

• Population Trend: Japan’s fastest-growing major city at 1.64% annually.

• Economic Vitality: Highest business startup rate in Japan at 6.3%.

• Famous Draw: Famous for Hakata ramen and open-air food stalls.

Fukuoka City, the largest city in Kyushu, is one of the few growing cities in all of Japan!

One reason for Fukuoka City’s success is its high quality of life: The airport is just 10 minutes from the city center. Public transportation, including subways, trains, and buses, is also very well-developed.

Fukuoka City actively promotes itself as Kyushu’s gateway to Asia, and it truly lives up to that title. Apart from Tokyo, Osaka and of course Kyoto, I’ve never seen more tourists, and there’s definitely things for them to do! The city feels very young, filled to the brim with hip cafes, stores, bars, and nightclubs at every street corner. Fukuoka is a vibe that you need to visit!

Employment, startups, and more

Fukuoka Prefecture accounts for approximately 3.4% of Japan’s GDP, which is nowhere near the Japan’s big boy cities, but how the city is growing is impressive.

In 2012, Fukuoka began calling itself “Startup City Fukuoka,” and in 2014, it was designated a National Strategic Special Zone for Startups and Job Creation. Doesn’t exactly roll of the tongue, but the policies that followed have been successful: Issuance of startup visas, tax incentives for entrepreneurs, the establishment of one-stop support centers called Startup Cafes, and perhaps the biggest one, the large-scale Tenjin Big Bang Project, which relaxed building height restrictions and transformed the city’s landscape.

As a proof of success new tech companies, especially startups, often prefer to establish their bases in Fukuoka, and a vibrant technology scene attracting young talent has emerged.

Tourism, and of course, ramen, are also excellent

In 2019, the number of foreign tourists visiting Fukuoka reached a record high, and the total number of foreign tourists in Kyushu as a whole increased 4.2 times in just 10 years.

The city has managed to claim Japan’s most popular dish, ramen. The whole city literary smells of Hakata ramen!

But fret not ramen haters, the city is almost as famous as Osaka for its vibrant street food scenes. And if your on a diet, the city also sports the most shopping malls in all of Kyushu.

After everything collapsed due to the COVID-19 pandemic, Fukuoka’s recovery was surprisingly rapid. By the end of 2022, the number of foreign tourists had recovered to about 90% of the 2019 level, and now there are more tourists than ever before.

Domestically, Fukuoka consistently ranks high in “most desirable cities to live in” surveys. The cost of living is far lower than in Tokyo or Osaka, urban life is truly comfortable, and beaches and nature are inside the city limits. A significant U-turn phenomenon is occurring, with Japanese people who moved to Tokyo a few years ago returning to Fukuoka in search of a better work-life balance.

If you’re looking for truly Japanese city that is still full of job opportunities and rents that are so cheap you’d blush, Fukuoka is the place.

BEWARE though: While real estate prices remain far lower than in Tokyo, they are rapidly rising.

Kumamoto: Kyushu’s Silicone Island

• Population: 972,195.

• Population Trend: Growing at 4.68% annually.

• Economic Vitality: Transforming into a global semiconductor hub with new TSMC factories driving nearby land prices up over 30%.

• Famous Draw: Famous for Kumamoto Castle and regional dishes like basashi.

Just when things seemed stable, everything changed overnight.

Kumamoto City’s population was projected to shrink, placing it in the same sad category as so many disappearing Japanese cities.

Then, TSMC arrived.

In 2021, Taiwan’s semiconductor giant TSMC announced it would build a large-scale new factory in Kumamoto Prefecture as a joint venture with Sony and Toyota. The first factory, called JASM, officially began operations in February 2024 and entered mass production by the end of that year. Over night, hundreds of acres of farmland were converted to hotels, apartments, houses and entertainment venues to cater the immigrating well-paid workforce.

But why Kumamoto?

You see, Kyushu was once known as “Silicon Island,” at one point accounted for approximately 40% of Japan’s IC chip production. When TSMC considered establishing a presence, Kumamoto was the first prefecture to jump on the opportunity with generous incentives. Subsidies of up to 150 million yen were provided to foreign companies, and up to 500 million yen to domestic companies wishing to relocate their headquarters.

Safe to say, it has paid of handsomely with economic forecasts predicting that TSMC’s presence will generate approximately 20.77 trillion yen in economic benefits for Kumamoto Prefecture by 2030, creating around 3,400 high-tech jobs and attracting over 100 supplier companies. Furthermore, a second factory for manufacturing more advanced 6-nanometer chips is already under construction.

However, not everything is going smoothly. They are facing a serious labor shortage. It is estimated that approximately 1,000 new semiconductor workers will be needed annually in Kyushu. Traffic congestion around the new industrial park is worsening, and housing shortages are severe. Luckily for TSMC, Japan excels in construction, and I am sure Kumamoto will do everything they can to ease the housing situation.

Kumamon and culture

After last week’s horrific 7.1 magnitude earthquake, I noticed that even during these dark times, people wanted to proudly show of their Kumamoto heritage. Even on the news, volunteers were wearing Japan’s most famous mascot, Kumamon, on their masks while clearing rubble.

Cultural heritage is also a major support. Kumamoto Castle, despite being seriously damaged both in this and the previous massive earthquake, still maintains its breathtaking beauty. Mount Aso, a massive caldera registered as a UNESCO Global Geopark, is truly a place like another world. The Amakusa Islands are incredibly beautiful.

Kumamoto city center is also very charming. Having partly grown up there, I fondly remember the cute local sweets shops mixed with modern shopping malls, and in true Kyushu fashion; the thousands of izakayas peppered around town ready to serve Japan’s thirstiest souls. The excellent Shinkansen station connecting the city with the rest of Kyushu, and a decently sized airport makes it the second hub of the island.

It’s hard to believe now, but Kumamoto Prefecture used to be one of the poorest cities in Kyushu. However, thanks to smart policies by the city and TSMC’s investment, the entire economy is shifting from agriculture and small-scale manufacturing to high-tech industries. Kumamoto Prefecture is betting heavily on the future of high technology. And frankly, it’s a very promising bet.

Kagoshima: A volcano, rockets, and empty houses

• Population: 579,000.

• Population Trend: Steadily shrinking amid nationwide rural depopulation.

• Economic Vitality: Food manufacturing drives the economy at 53% of industrial output.

• Famous Draw: Famous for the active Sakurajima volcano and Kurobuta pork.

Standing at the former residence of Saigo Takamori, I felt surrounded by perhaps Japan’s most interesting bit of history. It’s no exaggeration to say that this man created modern Japan, yet his house stands silently, almost as if forgotten in a city that is slowly disappearing.

Kagoshima is located at the southern tip of Kyushu, and it’s a beautiful. Watching the sunrise from the hotel’s hot spring, Sakurajima volcano erupts into the clear blue sky, its small plumes of smoke rising, a sight I will never forget.

However, the city itself is not in good shape. Kagoshima’s population is projected to shrink to 576,000 in 2026 from 579,000 in 2025, an ongoing trend in a city that’s experience population decrease of approximately 1.1% since 2015. Kagoshima Prefecture’s birth rate is actually slightly above the national average, which offers some relief, but it’s not enough to improve the situation.

Bright signs for the regional economy

The economic base is quite diverse. Agriculture is thriving, producing green tea, sweet potatoes, and the famous Kurobuta pork (may I say the world’s tastiest). Furthermore, there is a noticeable commitment to renewable energy. In 2013, a massive 70-megawatt solar power plant was constructed in Kagoshima Bay, one of Japan’s first hyper scale solar projects.

The opening of the Kyushu Shinkansen in 2011 reduced travel time to Fukuoka to approximately 1 hour and 20 minutes. This undoubtedly led to an increase in tourists and business travelers, and new developments such as AMU Plaza can be seen around the station. However, this is a double-edged sword. Easier access also means that it’s easier for local residents to pack their bags and leave.

Kagoshima Prefecture is also home to the Tanegashima Space Center, one of Japan’s major rocket launch sites, and is truly one of the most photogenic launch sites in the world.

Tourism is life

Kagoshima Prefecture relies heavily on tourism. While Sakurajima is the main attraction, we mustn’t forget Yakushima, a UNESCO World Heritage Site. Yakushima boasts the ancient cedar forest that served as the setting for the Ghibli film Princess Mononoke.

Walking through Yakushima’s forests, You’ll feel an indescribable sense of ancient history, with moss, mist, and trees that have survived for thousands of years.

However, the problem begins here. Tourism jobs are highly seasonal and tend to have low wages. Even though it’s Kagoshima’s fastest growing industry, it alone is insufficient to prevent the exodus of young people.

While the quality of life is high, the job market is quite limited. Frankly speaking, outside of tourism, agriculture and some niche manufacturing, there is a stark lack of opportunities.

Nagasaki: History, sorrow, and struggle

• Population: 392,281.

• Population Trend: Steadily shrinking due to rapid aging and youth outmigration.

• Economic Vitality: Driven by a historic shipbuilding sector and Japan’s second-largest fishing catch.

• Famous Draw: Famous for the Nagasaki Peace Park and Castella cake.

Nagasaki’s situation is perhaps the most severe among Kyushu’s major cities.

The city’s population is estimated to be approximately 379,400 as of July 2026, a continued decrease from the roughly 409,000 recorded in 2020. This represents one of the most rapid population declines in Japan, marked by a decrease of nearly 12% between 2015 and 2026. This decline comes from rapid aging, an extremely low birth rate, and decades of youth exodus. In fact, the population peaked around 1970, so it’s not exactly a new trend.

However, Nagasaki used to be one of Japan’s richest cities. It was the birthplace of Japan’s Industrial Revolution. It was a center of heavy industry, home to Mitsubishi Heavy Industries’ shipyards and coal mines. However, shipbuilding orders gradually declined, and coal mines closed.

Because the city is built on steep hills, it boasts breathtakingly beautiful scenery, but there is little flat land suitable for large-scale factories. Therefore, Nagasaki has desperately attempted to shift to other sectors. High-tech research, particularly Nagasaki University’s strong reputation in tropical medicine and renewable energy, has become a major focus. Software outsourcing and call centers are also examples. Offshore wind power and aquaculture offer hope for the future, but frankly, they haven’t filled the huge void left by traditional industries.

A incredibly rich history

From a cultural perspective, Nagasaki is a treasure trove. For centuries, Nagasaki was Japan’s only window to the West, and perhaps what its most known for, it suffered the tragedy of the second atomic bombing.

The sights here hold deep significance in people’s hearts. These include Peace Park, the Atomic Bomb Museum, Glover Gardens with its European-style mansions, and hidden Christian sites registered as a UNESCO World Heritage Site. Huis Ten Bosch, a Dutch-themed amusement park three times the size of Disney Land Japan, is also a major attraction. A new Hong Kong-based owner took over in 2022 and is undertaking a complete renovation of the park.

According to a report by the Nagasaki Prefectural Tourism Promotion Bureau, the number of tourists from outside the prefecture in March 2026 is projected to increase by 10% compared to the same month of the previous year, indicating at least a certain degree of positive progress.

The West Kyushu Shinkansen opened in September 2022, connecting Nagasaki and Takeo. While a transfer is still required to travel to Fukuoka, the journey time has been reduced by approximately 30 minutes.However, a concern is that this Shinkansen might not encourage population influx into Nagasaki, but rather cause commuters to leave…

Furthermore, there was a plan to attract a casino. Nagasaki City poured all its resources into a $3.8 billion project including a casino, constructing an integrated resort (IR) at Huis Ten Bosch, promoting it as a way to transform the local economy. However, at the end of 2023, the national government rejected the plan due to financial concerns. This was a huge blow to the already cash strapped region.

Attempting to fight back

Nagasaki City is currently offering small subsidies to attract remote workers and people returning home for the holidays. The Goto Islands have achieved some success in attracting IT professionals by providing allowances and fiber optic internet access.

With the decline in the child population, school consolidation is also progressing. In 2018, Iki City launched the SDGs Future City Project in collaboration with Fuji Xerox to establish local telework centers, allowing kids from communities too small for schools to get top-class education through technology.

Furthermore, Nagasaki Stadium City, a 100 billion yen sports, entertainment, and business complex, opened in October 2024. This can truly be called a big gamble for the future 🥁.

Nagasaki has soul, a true history, and a breathtaking beauty rarely seen elsewhere. If you want to really understand Japan, it’s a place you absolutely must visit. However, from the perspective of residence and investment, the headwinds are serious, and unless a large-scale new industry emerges, the situation is unlikely to improve.

Miyazaki: A small success story

Miyazaki, a tiny laid back town famous for its pristine beaches, amazing golf courses, and the worlds most expensive mango, has maintained almost perfect stability. With a positive growth of only 0.05% from 2015 to 2020, its population is approximately 401,000. In addition to its role as an administrative center, it functions as a resort and retirement home in Japan’s warm southern region.

I took a morning jog along the river in Miyazaki. Palm trees lined the path, a pleasant breeze blew, and a bunch of surfer dudes were getting ready to jump in the ocean. If I didn’t need a job, I could truly see myself live there.

Miyazaki shows that you don’t need a miracle to be sustainable. Just be a nice place for tourists and retirees and you might just prove the world that decline is not an inevitable force.

The real crisis is in small cities

Small regional cities throughout Kyushu are experiencing a frightening rate of population outflow. Makurazaki City in Kagoshima Prefecture lost 9% of its population in just five years. Misato City in Kumamoto Prefecture has shrunk to one-third of its size in 1947. Some of these areas are literally on the brink of extinction.

The government is implementing various measures, such as hometown taxes, regional revitalization subsidies, and incentives for relocating from distant areas, but their population decline keeps accelerating.

What separates Kyushu’s winners and losers?

1. The city mayor is extremely important.

Fukuoka, led by Mayor Soichiro Takashima, had a clear plan when he took office, driving massive growth through strategic deregulation and a relentless focus on becoming a startup hub. Kumamoto, driven by Mayor Kazufumi Onishi, actively attracted TSMC and succeeded. Compare these leaders to “failed cities” like Nagasaki and Kagoshima, which failed to explore methods for urban regeneration and steadily declined. Instead they clung to traditional tourism and legacy industries, ultimately missing out on modern corporate investments and young talent.

2. Employment, employment, employment.

People move where there are jobs. It’s that simple. Fukuoka created jobs in new economic sectors. Nagasaki City and Kitakyushu City lost their heavy industrial base and were unable to replace it on a large scale. Universities are also extremely important. Universities supply young talent and research results to the regional economy. Fukuoka, Kumamoto, and Kitakyushu all have major universities.

3. Roads, railways, and ports.

The Shinkansen supports tourism and business in cities like Kagoshima City and Kumamoto City. Sure, it’s a double edged sword as it also enables people to leave easier, but let’s be honest, a Japanese city will never be successful without a Shinkansen station. The modern airports and ports of Fukuoka and Kitakyushu are a major advantage for the region’s access to Asia, crucial both for industry and tourism. This is more hygiene than a fix; have it and you can still become a declining city. Don’t have it, and you never had a chance to recover in the first place.

4. Tourism is a necessary evil

The 4.2-fold increase in foreign tourists visiting Kyushu between 2008 and 2018 significantly revitalized Fukuoka, Nagasaki, Oita, and Kagoshima. Sure, tourism can be a serious distribution to people’s daily life, but let’s not beat around the bush here. Tourists are a necessity in Kyushu, and without them, many regions would collapse entirely. It’s also the simplest thing for Kyushu to promote as the island is full to the brim with incredible natural sights and cuisine that is truly world-class. I can’t think of a better place to spend your honeymoon.

5. Young people leaving is the biggest problem

An aging populations and an exodus of young people are by far the biggest reasons Kyushu is struggling. Fukuoka, with its relatively young population, is naturally in a favorable position. Nagasaki, with its very high proportion of elderly residents, is facing a negative spiral of rapid aging which leads to less taxes money for young people which leads to a youth exodus. Kyushu’s birth rate is slightly above the national average, providing a small buffer, but currently, population migration patterns are far more important than birth rates.

My prediction of Kyushu’s future:

Fukuoka will continue to lead the way and likely thrive even in the far future. Kumamoto has the potential to gain momentum rapidly if its semiconductor ecosystem grows as expected. Kagoshima and Miyazaki will experience a gradual decline or maintain the status quo if their tourism and local industries remain strong.

Nagasaki and the smaller towns in the provinces will face the most difficult path, and population decline is likely to increase rapidly until they completely collapse, unless there is a dramatic change.

Aging and a declining birthrate are the issues that everyone recognizes here, which is why I think they are slowly figuring out how to at least mitigate it. Already, effective efforts like smart city technologies for elderly care, better access to healthcare, and comprehensive support for families raising children are being successfully implemented. In the future, I think only. cities that can develop these further will thrive.

I hope this peace has convinced you that Kyushu is not a single story. While thriving cities lead the way and have a big change at become world-class metropolises, neighboring towns struggle to redefine their identities. Kyushu is perhaps the most paradoxical place with ancient traditions coexist alongside cutting-edge technology. A “forgotten” island, yet upon closer inspection, it might just hold the keys for Japan’s future.

It’s as if Toshiba angered the Greek gods and caught a reverse Midas touch…Instead of gold, everything they touched turned to ash. They championed HD DVD right as the entire planet switched to Blu-ray. Then they paid an insanely criticized premium to buy the US nuclear firm Westinghouse in 2006, betting their entire fortunes on a global nuclear renaissa…

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Today, , my dear friend and mastermind behind the institutional-grade equity research over at Asian Century Stocks, joins me to break down South Korea’s massive reforms, the brutal reality of Asian value traps, and why the global AI race is going to end in total commoditization.

(Disclaimer: Any stocks or investments discussed are not financial advice; this conversation is strictly for entertainment purposes only.)

1. The Five-Year Bet: Which Asian Country Gets Your Entire Net Worth?

Michael Fritzell: South Korea. They are actively copying the corporate reform playbook that the Tokyo Stock Exchange pioneered. While everyone is staring at the major indices, I see massive, underappreciated value across the small-cap space, a universe of two to three thousand stocks that are significantly cheaper than anything you will find in other developed markets.

The real catalyst is the mid-2025 introduction of fiduciary duty for directors. Directors will finally be legally responsible for all shareholders’ interests, not just the controlling family blocks. This makes minority abuse and shady related-party transactions incredibly difficult to pull off. Shareholder activism is blossoming early here, meaning minority investors can simply piggyback on campaigns by powerhouse firms like Oasis and Dalton to unlock deep value.

However, do not touch the major index. I would never buy the Kospi right here. Its entire rally has been artificially driven by AI CapEx and memory chip stocks experiencing a massive squeeze in DRAM prices, which is completely unsustainable over the long term.

2. The Dumbest Value Trap Western Investors Fall For in Asia

Michael Fritzell: Investors consistently fail to look at the actual character of the people running the business. The hard truth about investing in Asia, or honestly anywhere, is that you cannot rely on the legal system to protect you. At the end of the day, if these people want to cheat you, they can.

You have to ignore the spreadsheet and audit their public track record instead. Look at their historical capital allocation, their corporate structure complexity, and whether they have a habit of diluting shareholders or routing money into sister companies.

A stock can look flawless on paper with 60% to 70% of its market cap sitting entirely in cash. But if the founder has a decades-long track record of refusing to pay out a single cent, that cash position is completely irrelevant, it is a value trap. You are stuck waiting for a generational shift, like a son taking over the business and finally launching buybacks or dividends.

3. Singapore vs. Tokyo: Why Do Expats Choose the Lion City?

Michael Fritzell: Singapore wins purely on the perception that the hurdles to entry are lower, backed by world-class government marketing. The Singaporean government literally sponsored part of the production for Crazy Rich Asians because they understand how to build a global brand name. It just feels easier to integrate there initially.

Objectively, Tokyo is one of the coolest cities on earth, and Japan has an incredible, relaxed vibe where people seem genuinely more content. If Japan offered a legitimate golden visa and competitive tax benefits for expats, people like me would flock to Tokyo over Singapore in a heartbeat.

4. Will Japan’s GDP Shrink or Grow Over the Next Decade?

Michael Fritzell: Japan is fundamentally losing its structural competitiveness. Giants like Toyota and Daikin used to completely dominate export markets in developing countries, but they are now facing brutal competition from private Chinese companies led by young, hungry, 40-something managers.

Because of this, I expect Japan to suffer continued market share loss and a relative decline in GDP per capita. To reverse this, Japan desperately needs aggressive entrepreneurship from younger people who want to get rich, rather than just coasting on legacy firms formed in the 1950s and 60s like Sony and Casio. We need to see a Japanese equivalent of Spotify pop up, but those examples are incredibly rare right now.

5. The Best Political Leader in Asian History

Michael Fritzell: Deng Xiaoping. He did an immeasurable service to the Chinese population by dragging the country out of an incredibly backward, painful state during the 1960s. People frequently try to rewrite history, but the reality of that era was exceptionally rough.

That said, history hasn’t ended yet. China remains a communist country, and under the current framework, we still do not know where the economy will ultimately end up.

6. Can the Rest of Asia Compete in the Global AI Race?

Michael Fritzell: The software side of large language models is going to be completely commoditized. China has the capital and resources to copy and keep pace with American models, but outside of the US and China, no one else is going to build a standalone giant.

The structural issue with AI models is a total lack of pricing power because there are too many substitutes. There is very little true differentiation between Gemini, ChatGPT, or DeepSeek. Eventually, the hype will fade, the technology will commoditize, and the rest of the world will simply default to the cheapest, most accessible models provided by Google or Chinese tech giants.

7. Does Europe Have an Economic Future?

Michael Fritzell: Europe will be fine; the absolute doom loop narrative is completely off-base. Europe’s manufacturing base was crushed over the last 30 years because Western multinationals outsourced their factories to China, allowing their technological know-how to be copied. Now, that tech spillover is grinding to a halt as foreign direct investment into China plummets.

Meanwhile, places like the Nordic region maintain incredibly vibrant entrepreneurship and exceptional living standards. The current financial media is dominated by social-media-driven culture wars and a hyper-hot US stock market narrative. Back in 2010, the narrative was that the US was dying under a mountain of debt. Narratives shift rapidly, and the current misperceptions about Europe will disappear over time.

8. Are Chinese Stocks Uninvestable or the Bargain of the Decade?

Michael Fritzell: Over the long term, you simply should not invest in countries that refuse to protect minority shareholders. In China, the penalties for cheating foreign investors are virtually nonexistent. The Chinese internet index (KWEB) has been entirely flat for 10 years during the greatest Nasdaq tech bull market in history, and the CSI 300 is flat over a 35-year horizon.

This isn’t because the underlying companies are bad, they are actually performing very well operationally. It is the direct result of continuous share dilution and the atrocious treatment of minorities. Aside from massive, shareholder-friendly exceptions like Tencent or NetEase, foreign capital is heavily exposed. The domestic A-share market will survive because locals need an inflation hedge to protect their savings, but for foreigners, it remains highly hazardous.

9. The One Asian Market to Avoid Right Now

Michael Fritzell: India. Prime Minister Modi has done fantastic things for the country’s infrastructure and entrepreneurship, but the valuation multiples make absolutely no sense. You have standard Indian consumer stocks trading at 40, 50, or 60 times PE.

These businesses are not managed any better than equivalent companies in the Philippines or Indonesia, yet in Indonesia, you are only paying 8 times PE for the exact same fundamental quality. When a market’s story becomes that extreme, it is time to take the other side of the trade.

10. Asia’s Finest: The Most Important Business Leader in the Region

Michael Fritzell: Morris Chang, the founder of TSMC. Building a $2 trillion powerhouse out of Taiwan, a small island of just 22 million people, is one of the most remarkable feats in business history. Not even mainland China has successfully built a trillion-dollar company.

Chang completely revolutionized global tech by pioneering the independent foundry model. Instead of building closed ecosystems like Intel, TSMC acted as a neutral manufacturing partner for fabless chip designers worldwide. This strategy unlocked massive scale, generated immense returns on equity, and allowed them to out-invest the entire world in R&D. Even if they face future headwinds, the modern technological world entirely exists because of Morris Chang’s blueprint.

It is June 2026, and the financial laws of gravity are completely breaking down across two different hemispheres.

The US stock market has reached valuations that defy all historical sanity. The S&P 500 is currently sitting at a massive 41.6 on the Shiller P/E. As a refresher, this metric smooths out the normal ups and downs of the economy by looking at ten years of profits instead of just one. In plain English, a 41.6 ratio means investors are paying nearly $42 today for every $1 of profit those companies averaged over the last decade.

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To understand how insane that is, you have to look at 140 years of market data. The current valuation is more than twice the long-run historical average of 17.3. We have officially blown past the infamous 1929 peak of 32.6, which preceded the Great Depression. We even crushed the post-pandemic stimulus peak of 38.6. There is only one single moment in the entire history of American capitalism when stocks were more expensive than they are today. That was December 1999, right at the peak of the dot-com bubble, when the Shiller P/E hit 44.19.

Meanwhile, over in Japan, I am seeing a totally different milestone. The Nikkei 225 just broke 65,000 and hit an intraday all-time high of 66,428.81 in late May 2026. Japan spent over three decades trapped in the shadow of its own legendary crash. But unlike the current American market, Japan’s rally is not built on speculative AI euphoria. Japan’s CAPE ratio (Shiller P/E) is sitting at a quite reasonable 29.38. That is elevated globally, but it is nothing like the hallucinatory valuations Japan saw during its 1989 ultra-bubble, when their CAPE approached 100.

The American AI bubble is delusional

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Prime Minister Sanae Takaichi secured a massive supermajority in the February 2026 elections by reading the room.

Her winning message?

Revitalize the economy, strengthen national defense, and above all, enforce a hard cap on immigration.

This bears an eerie resemblance to "Sakoku 2.0", a term popularized during the Covid-19 pandemic referencing Japan's historical era of absolute national isolation.

This policy is fiercely contested globally. For one of the most rapidly shrinking countries on earth, embracing immigration seems essential for economic survival.

But what do the Japanese people think?

So far, they seem to love it!

This might sound strange in a country where basically everyone is aware that they will face a catastrophic labor shortage of 11 million workers by 2040.

People in favor of restricting immigration in Japan argue that Japan will survive this demographic collapse without mass immigration by simply automate everything. In fact, the government themselves claims Japan will capture 30 percent of the global market for physical AI by 2040, seamlessly deploying robots into nursing homes, restaurants, farms and construction sites.

I find this techno-utopian fantasy completely unrealistic.

Sure, Japan boasts incredible hardware engineering, but the country is notoriously terrible at software adoption and administrative modernization. Furthermore, Japan’s robotics leadership is actively slipping. The industry is shifting from rigid industrial arms to general-purpose robots powered by advanced AI, and Japan currently trails both the United States and China in key research and component production. We are not going to see 11 million humanoid robots walking the streets of Tokyo and Osaka to save the economy.

But maybe an economic fallout for curbing immigration is a price worth paying?

Many of you probably agree with Japan's hardline stance on immigration. Watching the disruption caused by mass migration across the West, Japan appears to be actively avoiding the same pitfalls. I see this view all the time on X and in my own comment section, and frankly, I agree there is merit to tightening the borders.

But a strict zero-immigration policy collides with one terrifying reality: No country in history has successfully reversed a falling fertility rate, and Japan shows zero signs of breaking that trend. Without immigration, a rapidly shrinking population is a mathematical certainty.

This leads to two massive issues for Japan:

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First, Japan’s insane national debt and its failing public pension system.

This is the structural elephant in the room. Japan’s dependency ratio (the number of retirees aged 65 and above compared to working-age people) is rising sharply. It will hit 60% by the early 2030s and a staggering 80% before 2050. You have a rapidly shrinking pool of workers funding a massive, aging cohort.

Without a massive influx of immigrant tax money to prop up the system, the government is executing a strategy of managed financial retreat. The state has already introduced a “macroeconomic slide” formula. This mechanism automatically keeps pension increases below wage growth and inflation, effectively cutting benefits over time. By 2040, the average pension level will be slashed by approximately 20 percent.

Because of this, we are staring down the barrel of widespread elderly poverty. Elderly households already constitute the largest category of public assistance recipients in the country. To stabilize national finances without immigrants, some academic models suggest the government would need to push the consumption tax to an impossible 40-50%. Since that is political suicide, the state will likely monetize the debt. This will trigger inflation that further erodes the purchasing power of fixed-income retirees. The government will simply force the elderly to work well into their 70s out of sheer survival necessity.

Second, a massive emptying out of Japan.

We are going to witness the death of the Japanese countryside.

According to the influential Masuda Report, without immigration, nearly half of all municipalities in Japan are at risk of vanishing entirely by 2040. By 2050, roughly 20% of regional areas could lose all of their inhabitants. Places like Akita, Aomori, and Kochi will see their populations plummet by over 30%.

As local tax bases evaporate, regional governments will go bankrupt. They will lose the ability to maintain roads, water systems, and power grids. The only rational response for young people is to pack up and abandon these areas.

If there is one silver lining, if you can call it that, it is that major cities in Japan will see a “population boom”, as the young people are abandoning their rural communities. The population will condense into a few highly efficient mega-cities like Tokyo and a handful of regional survivor hubs.

There is hope

However, some smaller cities are already countering this trend using the "compact city" model, with Toyama City serving as a highly successful prototype.

These survivor cities will be dense and hyper-concentrated around major public transit stations. The government will deliberately pull funding from sprawling suburbs and force residents into these walkable urban cores to drastically reduce the cost of delivering public services.

Is it a great solution? No, but it might be the only way for smaller cities in Japan to survive.

How will Japanese companies survive the labor shortage?

In the corporate world, I think I have a bit of a unique take now with the AI being so prevalent.

The return of the salaryman

I think we’ll see a resurgence of the traditional Japanese “salaryman,” heavily augmented by AI.

Artificial intelligence currently replaces specific tasks rather than entire jobs. The software is jagged. It excels at some things and fails spectacularly at others. This means companies cannot just fire their accounting departments and buy an algorithm.

Instead, large corporations will hire human generalists, something Japan Inc loves to do already. Their entire job will be to supervise flawed AI outputs, plug operational gaps, and physically intervene when the software inevitably breaks. Because these workers accumulate deep, firm-specific knowledge about how their particular company’s AI systems operate, they will become highly valuable assets. Japan’s cultural comfort with lifetime employment makes it uniquely suited for this specific kind of generalist labor market.

There will be no silver bullet for the workforce deficit

But augmenting office workers only solves part of the equation. What about the millions of missing physical laborers, service workers, and rural producers?

Take agriculture.

The average Japanese farmer is already pushing 70 years old. Without the controversial foreign trainee programs that previously funneled cheap labor into rural areas, domestic food production is going to crater. We will likely see a liberalization of farming laws which will result in the death of the small family farm, replaced by automated corporate agribusinesses, but overall, Japan’s food self-sufficiency will plummet.

Zombie companies will be replaced be monopolies

In the broader economy, the brutal truth is that thousands of companies simply won’t survive, but this might not be such a bad thing at first glance.

Japan is notorious for its zombie companies, unproductive, inefficient small-to-medium enterprises kept on life support for decades by zero-interest loans and government subsidies. Without an underclass of cheap, imported labor to exploit, these businesses will go bankrupt en masse.

This will lead to an era of ruthless hyper-consolidation. As the zombies die, the surviving workforce will be absorbed by a few large, capital-rich corporations.

On the bright side, because these mega-corps will be fighting to the death over a shrinking pool of available workers, we are going to see a massive spike in wages. The era of stagnant Japanese paychecks will end out of sheer demographic desperation.

Paradoxically, this hyper-consolidation means Japan’s stock market could actually boom. As the Nikkei giants absorb the market share of thousands of dead small businesses, corporate profits at the top will concentrate. We are looking at a starkly two-tiered economy: Aggregate GDP will shrink, but the remaining mega-corps will become wildly profitable monopolies.

But this wage growth and market concentration triggers a debt bomb. Rising wages mean sticky inflation. To fight that inflation, the Bank of Japan will have to raise interest rates. And when interest rates rise in a country with a national debt over 250% of its GDP, the government’s debt servicing costs will go fully parabolic.

The surviving monopolies will be the only ones able to afford to invest in the AI, automation, and higher wages required to keep operating. For the everyday consumer, this means the death of hyper-convenience. 24/7 convenience stores will slash their hours. Next-day delivery will become a premium luxury.

The inconvenient truth is that without migration, companies won’t magically replace 11 million workers; they will simply force consumers to accept less, while squeezing maximum productivity out of their remaining, AI-augmented human generalists.

Ultimately

If Japan actually locks the door on immigration, the result is a fascinating contradiction: the stock market will boom while the actual economy shrinks. As millions of workers vanish, thousands of small businesses will simply die off, leaving the surviving mega-corporations to scoop up all their customers and become wildly profitable.

But the stock market’s win is the everyday consumer's loss. For the average Japanese citizen, the legendary era of cheap, flawless convenience is over. They are going to wake up in a drastically more expensive country where basic services cost a premium, everything closes early, and the bill for a shrinking nation is paid entirely out of their own pockets.

Conclusion

If the Takaichi administration actually means what it says about immigration, they are making a massive trade-off. They are choosing social cohesion over economic growth. They are willing to accept a smaller economy, strained pensions, and dead rural towns as the price for keeping their core cities safe, clean, and culturally familiar.

I think this is the ultimate macroeconomic experiment of the 21st century.

Japan is proving that a modern society can look at the social fragmentation happening abroad and simply say no. They are choosing to manage their own decline, becoming smaller, older, and poorer on paper, to protect their way of life. The transition will be brutal, defined by vanishing services, soaring taxes, and empty neighborhoods. Ultimately, the everyday citizen will have to look around at this shrinking, expensive new reality and ask themselves a very uncomfortable question:

Sources:

• National Institute of Population and Social Security Research (IPSS) - Population Projections for Japan: This report outlines the official demographic forecasts, projecting a 30% population decrease and an elderly population of around 40% by 2070.

  • Link: https://www.ipss.go.jp/pp-zenkoku/j/zenkoku2023/pp2023e_Summary.pdf

• Immigration Services Agency of Japan - Statistics on Foreign Residents: These official government press releases contain the data showing that the number of foreign residents recently surpassed 4 million, largely driven by new worker visa programs.

  • Link: https://www.moj.go.jp/isa/publications/press/13_00062.html

• OECD - Recruiting Immigrant Workers: Japan 2024: This comprehensive international review examines how Japan has altered its long-standing migration policies to recruit foreign workers in response to severe, widespread labor shortages.

  • Link: https://www.oecd.org/en/publications/recruiting-immigrant-workers-japan-2024_0e5a10e3-en.html

• Japan Institute for Labour Policy and Training (JILPT): This government-affiliated agency provides extensive English-language research reports detailing Japan’s acute labor shortages and the emerging impact of AI on domestic employment practices.

  • Link: https://www.jil.go.jp/english/

• Recruit Works Institute - Future Predictions 2040 in Japan: This report details the demographic simulation predicting a structural labor shortage of 11 million workers across Japan by 2040.

  • Link: https://www.works-i.com/english/item/FuturePredictions2040_JP.pdf

• Global Market Insights / METI - Physical AI Strategy: Outlines the Japanese government’s strategic target to capture 30 percent of the global market for physical AI and robotics by 2040 to offset the workforce deficit.

  • Link: https://www.indexbox.io/blog/japan-aims-for-30-of-global-physical-ai-market-by-2040/

• Japan Policy Council / Population Strategy Council (Masuda Report): These reports provide the demographic projections showing that nearly half of all municipalities in Japan are at risk of vanishing entirely due to population collapse.

  • Link: https://isvd.or.jp/en/columns/local-government-extinction-structure

• World Bank - Toyama City Compact City Case Study: A comprehensive international review of Toyama City’s successful urban redesign to adapt to a shrinking and aging population using the compact city model.

  • Link: https://documents1.worldbank.org/curated/en/113011604996380368/pdf/Toyama-City-Compact-City-Development.pdf

• Mitsubishi Research Institute & Ministry of Finance - Pension Projections: These analyses provide economic estimates on Japan’s dependency ratio, the impact of the macroeconomic slide, and the projected reductions in public pension benefits.

  • Link: https://www.mri.co.jp/en/knowledge/article/202409_1.html

The numbers are so large they almost lose their meaning. We are looking at a nominal gross domestic product of roughly 665 trillion yen as of 2025, stacked against a gross government debt of 1,342 trillion yen. Depending on the metric, the government debt-to-GDP ratio sits between 230% and a …

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I was recently scrolling through videos of China’s newest automotive assembly lines, and honestly, it’s scary. I was looking at so-called “dark factories”, facilities like those operated by Xiaomi and BYD. They are so thoroughly automated they can operate in the dark, with basically zero human interaction, and a completed car rolls off the line every 10…

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I have tasked myself with finding the greatest investor in Japan, and the search did not take long.

While there are others who have achieved fame in the retail space, most notably the brash and vocal CIS, there is only one undisputed god of the Japanese investing scene.

His name is Takashi Kotegawa, but the financial world knows him simply as B.N.F.

He is the man who turned his student savings of roughly 1.6 million yen into a fortune exceeding 30 billion yen ($272 million).

That’s a 1,874,900% total return!

He is the man who managed to make over 2 billion yen ($18.2 million) in 10 minutes during the most infamous trading mistake in Tokyo Stock Exchange history.

He is the man who bought a commercial building in Akihabara with cash simply because he had run out of things to do with his money.

Kotegawa grants almost no interviews. He has no social media presence. He does not sell courses. He does not want your money. He wants only to trade.

And to understand his life since he went silent in 2020, I have compiled the available traces of his career: Old 2-chan forum posts, his few media appearances from 2006, public tax records, and the analysis of the Japanese trading community.

This report is his story….

Part I: The Death of the Salaryman

To understand Kotegawa, I must first paint the picture of the Japan he emerged from.

The year was 2000. The world’s biggest bubble had burst a decade prior, and the Nikkei 225 was a graveyard of optimism. The great Japanese dream of the salaryman, a stable, respectable career with lifetime employment that had underpinned the social contract since 1945, was dying. Japan was sliding into the deflationary abyss that would come to define its “Lost Decades.”

For the generation coming of age in the late 1990s, the corporate ladder looked less like a path to security and more like a trap. The “shinjinrui” (new breed) of young Japanese were disillusioned. They saw their fathers sacrifice their lives for corporations that were now discarding them. They looked for an escape.

The Digital Big Bang

However, a quiet revolution was taking place beneath the surface of this economic stagnation. The Japanese government, desperate to revitalize the financial sector, executed the “Financial Big Bang.” A critical component of this was the liberalization of brokerage commissions in October 1999.

Before this moment, trading stocks was a rich man’s game. It was gated by high fees and telephone orders. You had to call a broker. You had to pay a significant percentage of your trade execution. It was slow. It was inefficient. It was exclusive.

Suddenly, online brokers like Matsui Securities, Rakuten Securities, and E*Trade Japan emerged. They offered low latency and, crucially, low commissions. They opened the gates of the Tokyo Stock Exchange to the general public.

It was the dawn of the “Net Trader.” Thousands of young men retreated to their bedrooms. They armed themselves with PCs and high-speed internet connections.

They were the first generation to see the market not as a mechanism for capital allocation, but as a massive multiplayer online game played for real money.

Takashi Kotegawa was one of them.

Part II: The Birth of B.N.F.

Takashi Kotegawa was born on March 5, 1978, in Ichikawa, Chiba Prefecture. His background is aggressively ordinary. This is important. No math prodigy from a prestigious academy. No heir to a financial empire. He was a student at Nihon University, an average university at best, enrolled in the Faculty of Law.

In a parallel universe, Kotegawa graduates. He passes the bar. He becomes a salaryman lawyer. He works 14-hour days for a steady paycheck. He commutes on the Tozai Line. He retires at 65.

In this universe, he found the stock market.

The year was 2000. Kotegawa was 21 years old. He had saved approximately 1.6 million yen (roughly $13,000 at the time) from rigorously saving money from his part-time jobs.

The Victor Niederhoffer Connection

Hooked by the relentless ad campaigns of the new internet trading era, Kotegawa entered the market just as a historic downturn began. The US Dot-com bubble had just burst, and it evaporated trillions of dollars in wealth, creating a global contagion that dragged the Nikkei down to levels not seen in nearly twenty years.

While panic selling turned the markets into a slaughterhouse, Kotegawa quietly opened his account.

Needing a handle for the internet forums where traders gathered to share ideas, he chose “B.N.F.” It was a phonetic error; he intended to use “V.N.F.” to honor Victor Niederhoffer, but because the Japanese language treats “V” and “B” almost identically, the misspelling stuck.

The choice was telling. Niederhoffer was an eccentric American squash champion and George Soros partner, but his edge was purely statistical. He believed that markets followed strict statistical rules, specifically, that if an asset price deviated too far from the average, it was mathematically bound to snap back. This approach made him one of the most successful fund managers on Wall Street.

But in 1997, the math stopped working. Niederhoffer bet heavily that the Thai market had fallen too far and had to rebound. It didn’t. In a single day, his fund was wiped out. He lost $130 million in equity, erased his clients’ savings, and was eventually forced to auction his personal art collection just to pay the bills.

Now why would a young student name himself after a man who lost it all?

I believe Kotegawa saw the distinction between the method and the execution. He adopted Niederhoffer’s core philosophy: Buying the panic dip because the math says it must bounce, but he treated the 1997 crash as the ultimate lesson in risk management: Do not trade on borrowed money!

By the time his graduation approached in 2001, the ¥1.6 million ($13,000) he had scraped together from years of part-time work had ballooned to ¥61 million (~$500,000). That represents an explosive 3,712% portfolio growth in just a single year.

He calculated that the opportunity cost of finishing school was simply too high. Every hour in a law lecture was costing him millions. So, with only a few credits remaining, he decided to drop out.

Part III: The Art of Catching Falling Knives

I have analyzed hundreds of trading strategies. Most are absolute nonsense. They are rigged to look perfect on past data just to hook gullible subscribers. Kotegawa’s is different.

It is brutally simple. It is also psychologically impossible for 99% of people to execute.

Kotegawa’s Trading Strategy

Kotegawa made his initial fortune between 2000 and 2004. These were dark years for Japanese equities. The Nikkei 225 slid from 20,000 to under 8,000.

Most retail investors try to pick bottoms based on hope. They buy a stock because it has fallen 50% and they think “it cannot go lower.”

It usually goes lower.

Kotegawa inverted this logic. He did not buy because he liked the company. He bought because the selling was emotional. He waited for the selling to reach a mathematical breaking point, measured by the 25-day Moving Average Divergence (kairi-ritsu in Japanese).

Think of the 25-day Moving Average (MA) as a rubber band. When the price pulls too far away from this average, it stretches tight. Eventually, it has to snap back.

The Sector Rules

Kotegawa knew one number didn’t fit all. A utility stock doesn’t stretch like a tech stock. Through obsessive watching, he found the “snap point” for every industry.

Based on his old posts, these were his rough rules (measured against the 25-day MA):

• Pharmaceuticals: Buy at a 5–10% drop.

• Electric Appliances: Buy at a 10–15% drop.

• Food / Retail: Buy at a 15–20% drop.

• Tech / Internet: Buy at a 20–30% drop.

• Speculative / Penny Stocks: Buy only after a 30–50% drop.

When a stock crashed past these lines, Kotegawa struck. He was catching falling knives.

But the genius wasn’t the entry; any fool can buy a crash. The genius was the exit.

As soon as the stock bounced, often just 2% or 3%, he sold. He didn’t wait for a full recovery to the moving average. He grabbed the “dead cat bounce” and got out.

He repeated these small wins thousands of times.

By the end of 2004, he had made his first billion yen (¥1.1 billion, or roughly $10 million). He had turned his starting cash into a 690x return.

Part IV: How to Make Two Billion in Ten Minutes

Every superhero has an origin story. Every trader has a defining trade.

For George Soros, it was breaking the Bank of England.

For Takashi Kotegawa, it was the Mizuho “Fat Finger” error of December 8, 2005.

This event is the reason I am writing this biography. It is the moment Kotegawa transcended from “successful day trader” to “national legend.”

The Error

The date was December 8, 2005. J-Com Co., Ltd., a recruitment service company, was listing on the “Mothers” (small-cap) board of the Tokyo Stock Exchange. It was supposed to be a routine IPO.

At 9:27 AM, a trader at Mizuho Securities received an order from a client to sell 1 share of J-Com for 610,000 yen.

The trader made a typographical error. It was a simple slip of the keyboard. He entered an order to sell 610,000 shares for 1 yen.

The computer system at the Tokyo Stock Exchange did not catch the error. There were no circuit breakers for this specific type of volume discrepancy at the time. The order went live.

To put this in perspective, J-Com only had 14,500 outstanding shares. Mizuho had just offered to sell forty-two times the entire existence of the company for less than a penny per share.

The Recognition

The stock price collapsed instantly.

Most traders stared at their screens in confusion. Was it a system glitch? Was the company bankrupt? Was it a fraud? Fear paralyzed the market.

Kotegawa did not freeze. He saw the anomaly. He did not know why it was happening, but he knew the math was impossible. He knew that 610,000 shares could not exist.

He bought.

He bought with both hands. He bought 7,100 shares.

Remember, there were only 14,500 shares in existence. Kotegawa had just purchased nearly half of the company’s float in a matter of seconds.

Other sharks began to circle. The famous Japanese day-trader CIS, Kotegawa’s friend and rival, also bought, securing about 3,300 shares.

Between them, these two kids in their bedrooms now owned the majority of a newly listed public company.

The Exit

Mizuho Securities realized the error. Panic ensued on the trading floor. They tried to cancel the order. The Tokyo Stock Exchange system did not allow the cancellation because their technology was so outdated. The order stood.

Desperate to cover the short position they had accidentally created, Mizuho began buying back the shares at any price. They had to close the hole they had dug.

The price rocketed.

Kotegawa sold. He dumped his shares into the frantic buying pressure of the very bank that had caused the crash.

By the end of the day, Kotegawa had netted a profit of approximately 2.2 billion yen (roughly $20 million).

He did this in roughly ten minutes

The Aftermath

The incident became known as the “J-Com Shock.” It cost Mizuho Securities roughly 40 billion yen. The head of the Tokyo Stock Exchange eventually resigned. It was a national scandal.

Kotegawa, however, was the face of the incident. The media dubbed him “J-Com Man.” He was 27 years old. He had made more money in ten minutes than the average Japanese worker earns in ten lifetimes.

When asked about it later, he simply said that he was “lucky” and that “anyone could have done it”.

This is false humility. Thousands of professionals saw the same screen. Only Kotegawa acted with that size and speed. He had prepared his mind for years to recognize anomalies, and when the biggest anomaly in history appeared, he did not hesitate.

Part V: The Curse of Scale

By 2008, Kotegawa’s assets had ballooned to over 21 billion yen (approx. $200 million). He was one of the wealthiest individuals in Japan, and he was still under 30.

The Problem of Scale

Success brings its own problems. When you have 100 million yen, you are a speedboat. You can enter and exit trades instantly. When you have 20 billion yen, you are an oil tanker.

Kotegawa began to move the market. If he tried to buy a small-cap stock, his own buying pressure would drive the price up, destroying his entry price. If he tried to sell, he would crash the stock.

He was forced to trade only the most liquid large-cap stocks: Softbank, Toyota, Nintendo, and the mega-banks. He had to lengthen his holding periods. He couldn’t snatch quick pennies anymore. He had to hold stocks for days.

What is so funny about his trading strategy is that he had zero interest in the actual businesses. In a rare TV interview, He admitted he had no clue what the companies he traded actually did, nor did he care about their earnings guidance. His only reality was the line on the chart.

Part VI: The Lifestyle of a Monk

Most billionaire biographies are catalogues of excess: yachts, vineyards, and private jets. Kotegawa’s list is blank.

This is the “quirk” that makes him a cult figure in Japan. In a culture that prizes humility, he is the monk of the market.

He has exactly one indulgence: A 400 million yen condo in Tokyo.

Yet, visitors (the few television crews who were allowed in around 2006) reported that the apartment was practically empty. There was no art on the walls. No designer furniture. Just the trading station with its multiple monitors.

Allegedly, he did buy his parents a Toyota Crown Majesta, the ultimate symbol of conservative Japanese success, but he doesn’t drive. He still takes the bicycle.

His biggest splurge, famously, was buying two Nintendo Wiis. One can assume he played them alone.

His diet consists almost exclusively of cup ramen and convenience store onigiri. He claims that eating a large meal makes him sleepy, which slows his reaction time. He avoids caffeine because it makes him jittery.

He famously said, “If you care about the money, you cannot make the right decisions.” He views money as a score in a video game.

Thinking about what money can buy invites emotion, and to Kotegawa, emotion is the enemy.

Part VII: The Lehman Crisis

The year 2008 was a test of fire for everyone. Kotegawa was not immune.

The Lehman Loss

In September 2008, Kotegawa made a rare misstep. He bet on the survival of Lehman Brothers. He bought the stock, assuming the US government would bail it out as they had done with Bear Stearns.

They did not. Lehman Brothers filed for bankruptcy.

Kotegawa lost approximately 700 million yen (roughly $7 million at the time).

In a rare display of emotion, he admitted to punching his computer monitors. He broke two of them. It is the only recorded instance of him losing his temper.

However, what defines him is not the loss, but the recovery.

In October 2008, right in the heart of the crisis, Kotegawa made a move that shocked the market.

He paid cash, approximately 9 billion yen, for a commercial building in Akihabara. The building was known as “Chomp Chomp Akihabara” at the time (it is now known as the AKIBA Cultures ZONE). The building was a 6-story hive of maid cafes and anime shops.

As the real estate market was collapsing, cash was king. Kotegawa, that had piles of cash finally used some to buy a distressed asset in Akihabara, the holy land of otaku culture.

It was the perfect hedge. As a fellow Otaku himself, he knew the building was undervalued. He knew he couldn’t day trade 20 billion yen forever, so he swapped volatility for rent. For ten years, he earned a massive yield that required zero mouse clicks.

By 2018, rumors suggest he sold it for 12 billion yen, capturing a 30% gain on top of the rent.

Part VIII: Where is He Now?

Since the sale of the Akihabara building, Kotegawa has largely vanished.

He appeared in the “shikiho” (Japan Company Handbook) substantial shareholder lists for a few years, popping up on the registries of companies like JVC Kenwood or Oricom. But recently, his name has become scarce.

There are rumors. Some say he fled to Singapore to escape taxes. Others claim he shifted to private equity. But that contradicts his deep attachment to his home turf.

The reality is likely simpler. As his friend and rival CIS once said: “He doesn’t trade for money. He trades because it is the only thing he knows how to do.”

He is almost certainly still in Tokyo, sitting in a different high-rise, likely worth well over 30 billion yen. He has probably switched to global macro or index futures, where his massive size doesn’t break the market.

He is a ghost. But every time the market crashes, every time there is a panic, every time the charts turn red and the world is screaming “Sell!”, I know he is there.

Appendix: The Kotegawa Archive

Profile

• Name: Takashi Kotegawa (小手川 隆)

• Handle: B.N.F (B-N-F)

• Born: March 5, 1978, Ichikawa, Chiba

• Education: Nihon University, Faculty of Law (Dropout)

• Key Asset: AKIBA Cultures ZONE (formerly Chomp Chomp Akihabara) - Sold approx 2018

Estimated Wealth Trajectory

• 2000: 1.6 Million JPY - Initial Capital from part-time jobs

• 2001: 61 Million JPY - The Bear Market Divergence Strategy begins

• 2002: 96 Million JPY - Compounding small gains

• 2003: 270 Million JPY - Market recovery begins

• 2004: 1.1 Billion JPY - First billion yen milestone

• 2005: 8.0 Billion JPY - The J-Com Shock Trade (+2.2B yen)

• 2006: 15.7 Billion JPY - Featured on TV (”Gaia no Yoake”)

• 2007: 18.5 Billion JPY - Continued growth despite volatility

• 2008: 21.8 Billion JPY - Lehman Loss (-700M), Real Estate Purchase (9B)

• 2018: ~30.0 Billion+ JPY - Sale of Akihabara building

• 2025: Unknown (Likely >30 Billion Yen)

Strategy Summary

• 25-Day Moving Average: Primary baseline for value

• Deviation Rate (Kairi): The buy signal; specific % drops trigger entry

• Volume: Confirmation of panic/capitulation

• RSI: Secondary confirmation of oversold conditions

• Sector Correlation: Buying the “Laggard” in a moving sector

Famous Trades

• J-Com (2005): The 2 billion yen windfall from the Mizuho error.

• Lehman Brothers (2008): Bought the dip just before bankruptcy. Lost ~700 million yen. Punched two monitors.

• Softbank (2005/2014): Repeatedly traded swings in Masayoshi Son’s volatile empire.

Sources

• Purple Trading. “Legends of Trading: Mysterious Trader from Japan - Takashi Kotegawa”.

• Japan Times. “Day traders fight for respect in Japan’s tough market” (Coverage of CIS and B.N.F).

• Pocket Option. “Takashi Kotegawa Review: The Legacy of a Trading Legend”.

• Binance Square. “Meet BNF — The Japanese Day Trading Legend”.

• Ultima Markets Academy. “Trading Strategy of BNF Takashi Kotegawa”.

• Wikipedia (FR). “B.N.F (Takashi Kotegawa)”.

• Reddit r/Japan & r/JapanFinance. Discussions on Takashi Kotegawa’s whereabouts and real estate holdings.

• YouTube. “Gaia no Yoake” (Dawn of Gaia) - TV Tokyo documentary featuring B.N.F (2006).

Is this a bubble?

With the Nikkei 225 closing at 53,847 and the TOPIX standing at 3,613, the ghosts of 1989 have returned to haunt Japan.

Recently, the Japanese stock market has gone hyperbolic around the hype around Prime Minister Sanae Takaichi’s “Sanaenomics,” the frenzy in semiconductor stocks, and the sheer thrill that ”Japan might be back!”

The temptation to declare the market too expensive and hoard cash is strong. After all, the psychological barrier of 50,000 has been breached, evoking memories of the asset bubble of 1989 where the Imperial Palace grounds were rumored to be worth more than California.

However, in this article, I argue that the “Bubble 2.0” narrative is fundamentally flawed. I think we are witnessing a rational re-rating driven by the end of deflation, structural corporate reform, and a geopolitical realignment that favors Japan. Unlike 1989, when investors paid 60 times earnings for 1% yields, today’s market offers a positive equity risk premium and balance sheets loaded with cash.

The Ghost of 1989

To understand where we are, we must first exorcise the ghost that haunts every conversation about Japanese equities: the 1989 bubble.

In 1989, the Nikkei 225 peaked at 38,915. At that moment, the market was trading at a Price-to-Earnings (P/E) ratio of over 60x. The earnings yield was less than 2%, while the risk-free rate (10-year JGB) was hovering around 6-7%. Investors were essentially paying for the privilege of losing money relative to bonds.

Fast forward to January 2026. The Nikkei is at 53,847. The index level is higher, yes, but the valuation multiple has collapsed. The forward P/E of the Nikkei is approximately 23.9x, and more importantly, the broader TOPIX index trades at a forward P/E of just 17.1x. We have seen a massive compression in multiples over the last 36 years, even as earnings per share (EPS) have compounded.

Key Comparison: The Tale of Two Peaks (1989 vs. 2026)

• Index Level (Nikkei 225):

  • 1989 Bubble Peak: ~38,915

  • Jan 2026: 53,847 (+38% higher)

• Valuation (Forward P/E):

  • 1989 Bubble Peak: ~60x - 70x

  • Jan 2026: 23.9x (Nikkei) / 17.1x (TOPIX) (Valuations have compressed by ~65%)

• Cost of Capital (10Y JGB Yield):

  • 1989 Bubble Peak: ~6.0%

  • Jan 2026: ~1.1% (Capital is significantly cheaper)

• Equity Risk Premium:

  • 1989 Bubble Peak: Negative (-4.4%)

  • Jan 2026: Positive (+4.7%) (The signal has inverted; you are paid to take risk)

The crucial insight here is the Equity Risk Premium (ERP). In 1989, the bond market offered a risk-free 6%, while stocks offered a volatile 1.6% earnings yield. It was irrational to hold stocks. Today, the 10-year JGB offers ~1.1%, while the TOPIX offers an earnings yield of roughly 5.85%. Investors are being paid a premium of nearly 475 basis points to take equity risk. This is a signal of deep, persistent skepticism that has yet to be fully priced out.

The CAPE Ratio Perspective

Robert Shiller’s Cyclically Adjusted Price-to-Earnings (CAPE) ratio provides another layer of comfort. In the late 1980s, Japan’s CAPE ratio reached astronomical levels, nearing 100x, the highest valuation of any equity market in history. Today, the CAPE for Japan sits in the low-to-mid 20s, significantly below the US market, which is now around a CAPE of 40x.

The “intrinsic value” of a market is ultimately the present value of its future cash flows. In 1989, the market was pricing in growth rates that were physically impossible to achieve. In 2026, the market is pricing in modest growth, despite a backdrop of massive fiscal stimulus and corporate reform.

Sanaenomics and the End of Deflation

The second pillar of my thesis is macroeconomic. The inauguration of Prime Minister Sanae Takaichi has introduced a regime change that I believe the market has only partially discounted.

Sanaenomics is frequently compared to Abenomics, but as someone analyzing the legislative text, I see distinct differences. Abenomics was about defeating deflation through monetary velocity. Sanaenomics is about crisis management investment and strategic self-sufficiency. It is a wartime economy mindset applied to peacetime industrial policy.

I might not be a fan of the frivolous spending of Sanae Takaichi, but there is no denying that it is good for the stock market.

The ¥21.3 trillion ($136 billion) stimulus package approved in late 2025 is not a scattershot cash handout. It is highly targeted:

• Strategic Growth Investment (¥7.2 trillion): This capital is directed squarely at the commanding heights of the modern economy: AI, Semiconductors, and Defense. By subsidizing the capital expenditures (Capex) of major industrial firms, the government is effectively lowering their cost of equity and increasing their Return on Invested Capital (ROIC).

• Household Support (¥11.7 trillion): Sanaenomics addresses consumption with direct energy subsidies and cash handouts (¥20,000 per child). This is critical because it puts a floor under consumption during the transition to an inflationary environment.

For the value investor, this fiscal policy acts as a put option on the economy. The government has signaled it will not allow nominal GDP growth to stall. The Bank of Japan’s upgrade of FY2026 GDP growth to 1.0% is a direct result of this spending.

The End of Deflationary Psychology

For thirty years, cash was king in Japan because goods became cheaper tomorrow. That era is dead. Inflation is now sticky above 2%. The wage negotiations (Shunto) have resulted in hikes of over 5%. This “wage-price spiral” is actually the salvation of the Japanese equity market.

Why? Because inflation destroys the value of the massive cash piles held by Japanese corporations.

• The Hoarding Penalty: In a deflationary world, holding cash is an investment, so Japanese companies might have been seen as too conservative for hoarding cash, but it was actually a good strategy. In a 2% inflation world, a company with 40% of its assets in cash (a common profile in the Standard Market) is destroying shareholder value by 2% annually in real terms.

• The Behavioral Shift: Inflation forces management to do something with the cash, invest it (Capex) or return it (dividends/buybacks). We are seeing this shift in real-time.

Corporate Governance: The Revolution is Real

If macroeconomics provides the fuel, corporate governance is the engine. The change in tone over the last 24 months is nothing short of revolutionary. The days of polite nods and inaction are over. The Tokyo Stock Exchange (TSE) and the Financial Services Agency (FSA) have fundamentally altered the incentives.

The “Name and Shame” Regime

In March 2023, the Tokyo Stock Exchange released directives on how companies should improve their valuations by providing Price-to-Book (P/B) improvement plans.

Foreign observers who don’t understand Japan dismissed the TSE’s Cost of Capital Directive as there was no legal ramifications.

What they don’t understand is that in Japan, the threat of being named and shamed is more powerful than any punishment...

The exchange proved this by publishing a list of compliant companies, effectively isolating those who hadn’t disclosed P/B improvement plans.

By late 2025, over 90% of Prime Market companies had fallen in line.

The Unwinding of Cross-Shareholdings (Mochiai)

Cross-shareholding has been the poison pill of Japanese capitalism, companies holding shares in their clients and banks to cement relationships and insulate management.

• The Catalyst: The FSA has pressured the mega-banks and insurers to liquidate these holdings to zero.

• The Value Unlock: When a company sells a cross-shareholding, it converts a low-return asset (a stagnant stock) into cash. It then faces pressure to return that cash to its own shareholders. This creates a “double compounding” effect: the seller becomes leaner and more capital efficient, and the cash is recycled into the market via buybacks.

In 2024, share buybacks hit a record ¥18 trillion. In 2025, the pace accelerated further and will likely continue accelerating throughout 2026.

Which Sectors are Worth Investing In?

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The US doesn’t have a monopoly on superstar investors with cult-like followings on X.

Japan has its own market wizards, and in this series, I profile the country’s three absolute best: www9945, Mikimaru, and Kabu1000.

In Part 1, I looked at the Janitor who amassed $5 million. Now, in Part 2, I reveal how Mikimaru (みきまる), a practicing physician, turned a combination of high dividends and tangible “shareholder gifts” into serious wealth. By compounding cash returns with a steady stream of goods, he built a multi-million-dollar fortune.

The Alchemist of Fukuoka

In the high-frequency, algorithmic coliseums of modern finance, where latency is measured in nanoseconds and value is often decoupled from tangible reality, the investment methodology of the individual known as “Mikimaru” appears to be a relic of a bygone era.

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To the uninitiated institutional eye, Mikimaru, a pseudonym for a practicing physician based in the Fukuoka Prefecture, might be dismissed as a “Yutai” (shareholder perk) hunter. The Yutai system is a unique Japanese tradition where companies remunerate shareholders not just with cash, but with physical goods like premium food, restaurant vouchers, or prepaid cards. Wall Street often sneers at this as an inefficient use of capital.

Yet, to dismiss Mikimaru as a mere coupon collector is a profound analytical error. A deep-dive analysis of his decades-long track record, his widely read blog (”Mikimaru’s Shareholder Perk Investment”), and his published works reveals a sophisticated, ruthless, and psychologically fortified capital allocator.

He has constructed a proprietary valuation framework called “Comprehensive Combat Strength” (Sogo Sentoryoku).

This report deconstructs how a provincial doctor turned a disastrous early trading career into a fortune by realizing a fundamental truth. The greatest risk to an investor is not market volatility, but their own emotional fragility.

Part I: Origins of the “Yutai King”

The origin story of Mikimaru is indistinguishable from the tragic archetype of the Japanese retail investor in the early 2000s. Entering the market around 2001, Mikimaru had just finished his medical degree, and as a young physician with a high disposable he dove head first into investing. The Japanese market of this era was a desolate landscape. The bubble of 1989 had long burst, but the “Lost Decade” was metastasizing into a permanent state of deflationary stagnation.

Early records and retrospective writings from his blog indicate a chaotic initial phase. Like many people trading part-time, he was very susceptible to hyped up stocks. He treated the Japanese market like a casino which resulted in significant capital destruction. He describes this era as one of “tuition payments” to the market…

The turning point arrived in the mid-2000s, coinciding with a broader renaissance of value investing literature in Japan. Mikimaru encountered the works of Benjamin Graham and the early letters of Warren Buffett. The intellectual pivot was sharp. He abandoned speculation for the rigid discipline of “Net-Net” investing: Buying companies trading below their Net Current Asset Value (NCAV).

Mathematically, this was sound. The Japanese market in the mid-2000s was littered with companies trading at 0.5x or 0.3x book value, effectively worth more dead than alive. However, Mikimaru soon encountered the “Value Trap” paradox. A stock cheap enough to be a Net-Net is often a terrible business with declining revenues and indifferent management. Holding such stocks is a test of immense patience.

He realized that “Deep Value” was intellectually satisfying but emotionally corrosive. Watching a portfolio of stagnant, obscure machinery manufacturers while the rest of the world (and growth stocks) moved forward created a sense of futility. He needed a mechanism to bridge the gap between buying value and realizing value.

The Discovery of “Anesthesia”

It was here that Mikimaru synthesized his defining insight: The psychological utility of the Shareholder Perk. He observed a curious phenomenon in his portfolio. When he held stocks that sent him tangible goods, a box of seasonal vegetables, a voucher for a steak dinner, his tolerance for price volatility increased dramatically.

True to his medical background, he dubbed this the ‘Anesthesia’ of investing.

In traditional finance, a ¥5,000 dividend and ¥5,000 worth of rice are economically equivalent (ignoring taxes). To Mikimaru, they were distinct. The cash dividend is invisible; it disappears into a brokerage account, indistinguishable from capital. The rice is physical. It arrives at the door. It is consumed by the family. It creates a positive feedback loop unrelated to the stock ticker.

More importantly, the perk creates a “Yield Floor.” If a stock trading at ¥1,000 pays a ¥30 dividend and gives ¥20 in perks (5% total yield), and the price falls to ¥500, the yield on cost for a new buyer becomes 10%. This creates a natural support level where retail investors, attracted by the massive yield, step in to buy, preventing the freefall often seen in non-Yutai growth stocks.

By 2008, as the Global Financial Crisis decimated portfolios worldwide, Mikimaru had fully pivoted. He was no longer just a value investor; he was a “Yutai Value” investor. He aggressively deployed capital into the crash, targeting companies with strong balance sheets and generous perk programs.

While others panicked, he focused on the arrival of his shareholder gifts.

Part II: The Mikimaru Framework

Mikimaru’s methodology is codified in his “Comprehensive Combat Strength” (Sogo Sentoryoku) system. The terminology, borrowed from Dragon Ball’s power levels, presents a playful exterior that masks a rigorous, multi-factor valuation model

The central thesis is that a stock’s attractiveness cannot be reduced to a single metric like PER (Price-to-Earnings) or PBR (Price-to-Book). Instead, it is the sum of its valuation, its growth potential, and crucially its Total Yield.

The formula for Total Yield in the Mikimaruverse is explicit:

This inclusion of the “Monetary Equivalent of Perks” is the secret sauce. Institutional analysts value perks at zero. Mikimaru values them at market replacement cost.

If a company gives a voucher for a ¥4,000 meal, that is ¥4,000 of post-tax disposable income saved. For a high-earning doctor in a top tax bracket, earning ¥4,000 net might require earning ¥8,000 gross. Therefore, the “Invisible Dividend” of the perk is mathematically far more valuable than the cash dividend.

The Ranking Hierarchy

To manage the cognitive load of tracking hundreds of positions, Mikimaru assigns a “Combat Rank” to every stock. This ranking determines portfolio allocation.

🏆 Rank SS: The Holy Grail

Valuation: PER < 10x | PBR < 0.6x Yield: Total Yield > 5.0% Quality: Strong balance sheet (Net Cash). Identifiable catalyst for growth or re-rating.

ACTION: Maximum Aggression. Top 5–10 holding. Buy until it hurts.

💎 Rank S: Elite Class

Valuation: PER < 12x | PBR < 0.8x Yield: Total Yield > 4.5% Quality: Stable moat. Durable competitive advantage. “Sleep well” stock.

ACTION: Heavy Allocation. Core portfolio pillar.

✅ Rank A: Standard / Good

Valuation: Fair Valuation Yield: Total Yield > 4.0% Quality: Solid business. Attractive perks that are personally useful.

ACTION: Standard Unit. (e.g., 100–500 shares). Hold for perks.

👁️ Rank B: Watchlist

Valuation: Average Yield: Average Quality: No significant catalyst.

ACTION: Monitor. Hold minimum unit or sell.

⛔ Rank C: Avoid

Valuation: Overvalued Yield: Low Yield Quality: Dilutive management. Declining moat.

ACTION: Liquidate.

The “Jungle” Strategy

To navigate the Japanese market, Mikimaru employs a “Jungle” strategy, holding hundreds of names (400–600). This extreme diversification is a structural necessity dictated by the regressive nature of Yutai yields.

Unlike standard dividends, which are linear (owning 10x shares pays 10x dividends), Yutai perks effectively punish concentration. A minimum unit of 100 shares might yield a ¥2,000 gift card (a 2% yield) but increasing that position to 1,000 shares often yields only a marginal increase, perhaps to ¥3,000 (a 0.3% yield). This math forces the investor to “farm” the minimum unit across a vast number of companies rather than concentrating capital.

Within this broad “Jungle” portfolio, equities are assigned one of two distinct roles:

• The Gladiator: Deep-value “shield bearers” (often PBR around 0.3x) like construction firms or regional banks. They provide the defensive line through asset value and steady dividend floors.

• The Alice: Growth stocks disguised as value. These are potential “ten-baggers” entering new markets or expanding margins.

The ultimate goal is to identify Gladiators mutating into Alices: cheap, safe stocks that suddenly find a growth engine. When a stock offers the downside protection of a Gladiator with the explosive upside of an Alice, it achieves the coveted “SS” rank.

Part III: Mikimaru’s Portfolio

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The US doesn’t have a monopoly on superstar investors with cult-like followings on X (formerly Twitter).

Japan boasts its own legion of market wizards, and in this three-part series, I’ll dissect the strategies and influence of the country’s most famous retail investors, who are arguably its very best.

The three titans I will profile are www9945, Mikimaru (みきまる), and Kabu1000 (かぶ1000). Each embodies a different facet of the retail-investing ethos, from the art of hunting shareholder perks to the grit of building a fortune on a janitor’s salary.

I begin with the man who best exemplifies the rags to riches side of Japanese retail investing:

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www9945, a self-made legend who turned life’s humblest start into an investing fortune

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I know this is not my lane, but I just needed to get my opinion out on the recent Jimmy Kimmel/Charlie Kirk debacle. Heck, it is my platform and I write what I want! So here goes:

Firstly, I do not intend to discuss politics behind this, nor if I think it was right or wrong, but rather a fact we seem to have forgotten: Companies are not cowardly nor evil!

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Imagine a world without theme parks: No rollercoasters roaring through loops that make you feel that tickling sensation you can't get from anywhere else.

No merry-go-rounds spinning beneath those warm, nostalgic lights that make your kids shut up for a second so you can relax and scroll your Tiktok feed in peace…. and absolutely no churros dusting your s…

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