It takes a profound lack of self-awareness for a politician to govern over three decades of wage stagnation and then act shocked when young people stop spending money.

During a recent Diet session, Finance Minister Satsuki Katayama clutched her pearls over a newly coined phenomenon sweeping the nation: NISA Poverty (NISA貧乏).

Suddenly my morning routine of watching Japanese TV before work became packed with morning show panels about 20-somethings skipping dates, cutting out skincare, and eating instant ramen in dark apartments.

Their crime?

Hoarding every spare yen to max out their newly expanded tax-free investment accounts (NISA).

But why now?

The political class seems to think this is a moral failing of the youth. I think it is a political abandonment of them to serve their biggest voting block, retirees.

For over thirty years, the Japanese public treated the stock market like a radioactive casino. The catastrophic burst of the economic bubble in the early 90s traumatized an entire generation. The prevailing wisdom became to keep your life savings in a bank account yielding 0.001%. In a deflationary environment, hoarding cash was technically a winning strategy. Your money quietly gained purchasing power while prices fell.

That world is gone. Inflation is back, eating away at those cash deposits. But more importantly, the bedrock of Japanese middle-class security has crumbled.

The old contract for the average Japanese person was simple: You graduate, join a company, and pledge your absolute loyalty. In exchange, you get lifetime employment, a steady trajectory of seniority-based raises, and a rock-solid pension. You didn’t need to understand compound interest or asset allocation because Japan Inc. took care of you.

Today’s youth look at that deal and laugh. They know the pension system is buckling under the weight of a hyper-aging population. They know lifetime employment is a relic mostly reserved for older men at legacy corporations. And most painfully, they know their wages are objectively terrible on the global stage.

There was a time when Japanese salaries were the envy of the world. Today, they aren’t even high for Asian standards. We have been utterly lapped by Singapore, Hong Kong, Taiwan, and South Korea.

This brings us to the math of the new NISA.

In 2024, the government supercharged the private investment program, NISA (Nippon Individual Savings Account), raising the annual tax-free investment limit to 3.6 million yen (about $24,000 USD).

For a typical young salaryman in Tokyo, 3.6 million yen isn’t spare change. It is essentially their entire annual take-home pay!

This fact makes me torn between a deep pessimism about the state of the country and strong optimism about the kids themselves.

The pessimism comes from the necessity of it all. It is undeniably grim that a 24-year-old feels compelled to sacrifice the joy, socialization, and exploration of their twenties to build a fortress of Vanguard ETFs. A healthy economy encourages young people to take risks, start businesses, travel, and consume. When your youth are aggressively front-loading their retirement accounts instead of living their lives, it means they have zero faith that their labor will ever pay off. They have realized that in the 21st century, capital returns crush wage growth.

But the optimism comes from watching their agency. The older generation might still view buying equities as gambling, but the kids have watched the stock markets only go up!

What’s interesting is that these young investors overwhelmingly prefer American index funds over their domestic market. The Nikkei has performed well recently, but I think the ultra-pessimistic reality that Japan’s population is slowly collapsing has made them weary about their companies’ future. The American market offers global tech monopolies, population growth, and a relentless focus on shareholder returns.

Furthermore, buying dollar-denominated assets is a deliberate hedge against the chronically weak yen. These young workers already have their human capital tied up in the Japanese economy and paid in yen. Tying their entire financial capital to the exact same stagnant ecosystem would be terrible risk management.

This investment craze is definitely not just a fad. In recent surveys on what high school boys want to be when they grow up, “Investor” popped up in the top 10 for the first time in Japanese history.

Critics and older commentators love to scold these kids, arguing they should “invest in themselves” by traveling or networking. That advice rings incredibly hollow coming from the generation that pulled the ladder up behind them. Choosing financial independence over another overpriced dinner in Roppongi is a perfectly logical response to a broken economic system.

The government shouldn’t be shocked that people are using the NISA system exactly as it was designed. Instead of lecturing the youth on their consumption habits, politicians need to take a hard look in the mirror and figure out why Japanese salaries have fallen so far behind.

Until wages rise and faith in the future is restored, the kids are going to keep buying the dip.

I don’t blame them for a second.

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 100 seconds.

Watching this, a grim question hit me: How on earth can Japan, burdened by its massive legacy workforce and factories, compete with that?

For over half a century, Japanese cars set the global standard for reliability, efficiency, and mechanical engineering. Brands like Toyota, Honda, and Nissan transformed Japan into a global economic superpower. But the automobile is no longer the mechanical marvel of the 20th century; it is becoming a computer on wheels.

This is a look at what happens if Japan’s auto industry collapses.

But first:

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Why it’s stupid to make both EVs and ICE cars

For years, Japanese automakers, led prominently by Toyota, have championed a multi-pathway strategy, arguing that customers demand a mix of internal combustion engines (ICE), hybrids, plug-in hybrids; before the car industry transitions to full EVs. And because hybrid vehicles have generated record profits recently, they feel financially validated.

But here is my core thesis: You cannot just start investing more in EVs when the “time is right” and hope to catch up simply because you have a lot of money from your hybrid segment.

Running an ICE factory and an EV factory simultaneously is an absolute logistical and financial nightmare. You will always be vastly more inefficient running dual platforms, splitting your R&D budget, maintaining dual supply chains, and managing two entirely different workforces, compared to a pure-play EV competitor.

Can Japanese automakers catch up?

Do companies like Toyota, Nissan or Honda even have a chance to catch up? And how would that realistically work?

Toyota’s master plan relies almost exclusively on a huge technological leapfrog: The commercialization of solid-state batteries by 2027 or 2028.

If successful, it would double range, slash charging times to minutes, and potentially reset the whole EV board. Right now, though, it feels more like wishful thinking than a sure thing. At this point, it’s a hope, not a promise. We still don't know if the tech works, and actually mass-producing it is going to be a massive roadblock.

In fact, Toyota claimed to have working solid-state batteries in 2013, 2016, 2017, 2020, and 2022, promising a launch 'in the next two years' every single time. This time might be different, but do not put your hopes up.

Then there is the software gap.

The competitive edge today lies in Software-Defined Vehicles (SDVs). Modern car owners expect their cars to improve over time via Over-The-Air (OTA) updates. Toyota is currently rolling out its Arene operating system, proudly announcing that their fleet will be true SDVs by 2026.

But look at the sheer reality of the gap: Last year, BYD pushed out roughly 200 OTA software updates to continually refine their vehicles; Toyota managed about 8…

Catching up requires a complete dismantling of Japan’s hierarchical, perfectionist corporate culture, and I am highly skeptical they can move fast enough to close a gap this wide.

How will Japanese automakers fall?

Take this with a grain of salt as I've only consulted for Japanese automakers on minor projects, but I see their decline unfolding in three phases over the next decade:

• Phase 1: Losing Emerging Markets (Years 1 to 3): The first domino to fall is Southeast Asia. Historically, this has been a Japanese fortress with up to 90% market share, but the region is rapidly adopting EVs. Chinese OEMs, facing brutal price wars at home, are aggressively exporting and localizing production in places like Thailand. The Japanese monopoly in the Global South is already breaking.

• Phase 2: Financial Strain (Years 4 to 7): As global sales contract, the fixed costs of operating legacy assembly plants will become an unbearable weight. Earnings guidance will be slashed, and the massive cash reserves held by companies like Toyota will burn rapidly as they frantically try to fund their delayed EV platforms.

• Phase 3: The Hollowing Out of the Supply Chain (Years 8 to 10): Unable to sustain operations, major automakers will be forced to close domestic plants. Because ICE cars require thousands of specialized parts that EVs do not, most of Japan's huge network of Tier-2 and Tier-3 suppliers will not be needed, triggering a wave of mass bankruptcies. While giants like Toyota will likely survive, their footprint will fundamentally change. The majority of their domestic factories will face closure or outsourcing, resulting in hundreds of thousands of job losses.

If the auto supply chain starts collapsing, I think the Japanese government will step in, but political instinct will likely not be to force painful, necessary innovation. It will be to pump endless capital into failing suppliers to prevent unemployment. Keeping these zombie factories on life support will only drain resources from the startups and tech firms that actually need the capital, accelerating the broader economic stagnation.

If this were to happen, the numbers paint a grim picture of a nation losing its primary engine of wealth generation.

In 2024, auto manufacturing comprised 2.9% of Japan’s GDP. More importantly, motor vehicle exports made up 21% of the nation’s gross exports. If these exports evaporate, Japan faces a permanent structural trade deficit, leading to a perpetually weak Yen and crushing imported inflation.

If Autos collapse, what’s Japan’s substitute?

The obvious answers are advanced semiconductors and industrial robotics.

Already recognizing the strategic threat, the Japanese government is pouring $25.7 billion into a chip renaissance, subsidizing massive TSMC plants and launching state-backed ventures like Rapidus to build 2-nanometer chips. Furthermore, Japan remains the undisputed king of industrial robotics, currently producing 38% of the global supply through giants like FANUC and Yaskawa.

But there is a brutal catch: You cannot replace a car factory with a chip fab when it comes to human beings.

The automotive sector employs over 8% of Japan’s workforce. A $1 billion auto plant employs thousands of blue-collar workers and supports entire regional towns like Toyota City in Aichi Prefecture. A modern semiconductor plant is highly automated and employs only a fraction of that number, requiring highly specific advanced degrees in chemistry and physics.

While a thriving chip and robotics sector will generate massive corporate wealth and keep Japan globally relevant, it won't absorb millions of displaced assembly line workers. Very few jobs offer automotive-level wages without requiring extensive specialized education. Consequently, these laid-off workers will likely never find comparable employment, inevitably hollowing out Japan’s middle class and guaranteeing a grim future for this demographic…

My final take

It should come as no surprise that I am strictly avoiding Japanese automakers as an investment.

The story that companies like Toyota can simply coast on hybrid profits while they figure out software and manage to leapfrog all current battery manufacturers by releasing the world’s best EV batteries 2027 is risky to say the least.

Also, running inefficient dual ICE/EV platforms against hyper-agile Chinese competitors operating fully automated “dark factories” for EVs only is a losing battle.

Unless Japanese automakers can miraculously execute their solid-state battery gamble on time, completely overhaul their software development cultures, I think there is a real chance of their total collapse!

Japan will survive, but its economy will sharply divide. The highly educated elite will continue to succeed in modern industries like semiconductors. But a big part of the broad, comfortable middle class, the backbone of the post-war auto boom, will disappear.

If you wanna dive deeper into the death of the Japanese car industry, watch my video on it here:

Japan Inc. is facing a demographic time bomb.

The scale of what is happening to Japan’s corporate landscape is truly terrifying:

Read more

Japan is frequently associated with lifetime employment, strict corporate hierarchies, and decades of stagnant wages. However, there are companies that definitely brea…

Read more

My recent report on Takashi Kotegawa,

,became one of my most shared articles ever.

In this video, I go deeper into the technical side of his “25-Day Moving Average Divergence” strategy that I outlined in the text. I break down the specific charts from the 2005 crash and the 2008 Lehman shock to show you exactly where he bought when everyone else was selling.

I am trying something new today. I will put a claim I’ve heard time and time again to the test: The AI boom is hoarding all the me…

Read more

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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Have you heard of FastNail? It's a Japanese salon chain that offers ultra-cheap gel manicures to teens, the kind of place teenagers go for a quick beauty fix under 60 minutes.

Sounds ordinary enough, right?

Well, this same company also claims to own a data center and is busy mining Bitcoin. Yes, this is the real strategy of Convano Inc., the Tokyo-based …

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No, it wasn’t Scandinavian level free and perfect (a biased half Swede here). Yes, Tokyo hospitals love clipboards and rules, and public hospitals do look like they’ll fall apart at any moment.

But on cost, it was fine. Shockingly fine, especially compared to our favorite country to roast, the United States. And yet the US still …

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When boards finally crack a window and hire a foreign chief, headlines swing between “savior” and “scandal.” So: are foreign leaders good for Japan Inc, or just good copy? Let’s look at results:

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Me and my wife, both born on this lovely, but forgotten island, went on our honeymoon to Kyushu, and it was… AMAZING! The people, the food, the sights honestly blew our minds away, even though we’ve been here countless of times before.

It truly made me realize how much tourists that just travel to Tokyo, Osaka and Kyoto are missing out on. Kyushu has muc…

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1. The manga author who predicted Fukushima warns Tokyo is next

2. July 5, 2025: The Day of the Tokyo Megaquake

3. Which parts of Tokyo will be destroyed, and which ones will survive

4. How many people will die?

5. What a megaquake will do to Japan’s economy

6. The biggest lesson: Belief won’t save you, but preparation might

7. About the Data & Sources

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When I was a kid, my dad would often talk fondly of his backpacking journey through Vietnam and Cambodia in the 80s, when both countries were cautiously opening up to the world, curious locals crowded around wherever he went, fascinated by the rare sight of a foreigner, and where a single governmental misstep could shatter their fragile path toward the future.

Mongolia today has that same embryonic energy.

The capital of Mongolia is rugged and raw. Drab Soviet-era apartment blocks line the potholed streets, relics of an old empire’s embrace.

I arrived in Ulaanbaatar (or UB as the locals call it) in late April, stepping out of the plane into a city that felt like it had just emerged from a war no one remembers. On the city’s surrounding mountain outskirts, traditional ger tents (yurts) sprawl in improvised neighborhoods, thick black smoke from their chimneys mixing with coal dust in the sharp spring air.

The UB skyline is a clash of eras: The first shopping mall in UB, the State Department Store with socialist realism vibe stands beside cranes erecting modern high-rises, such as the Shangri-La hotel district, a city within a city filled with bars and restaurants indistinguishable from their New York counterparts. Modern LED billboards with global celebrities are peppered along the buildings. Yet, locals are staring at us like we're the first foreigners to ever set foot there.

In the central square, a grand statue of Chinggis Khan presides, as if reminding Mongolians of a far older legacy than the Soviet one.

Then there's the traffic… Traffic obeys a logic of its own, with armies of aging Japanese vans clogging roads as far as the eye can see. In fact, nearly 95% of all vehicles imported into Mongolia are used cars, and about 90% of those come from Japan. Every taxi we took was a Toyota with the dashboard still in Japanese, and often even the built in GPS system stuck in Japanese, accompanied by a nasal Japanese female voice, begging the driver to slow down.

Many of these cars are right-hand drive – built for Japanese left-side roads – yet Mongolians drive on the right. It’s a daily reminder that Mongolia makes do with hand-me-downs from its wealthier friends.

At night, my friend Danay performed at a comedy bar in central UB that might as well have been a sister club to the Laugh Factory in Los Angeles, where young Mongolians in trendy clothes laughed their asses off to comedians with incredible delivery, while Korean pop songs mixed with American hip-hop were pumped out between sets.

Mongolia’s younger generation has basically skipped the one-channel state propaganda TV era and dived straight into the internet age. Especially South Korean soft power, is everywhere. K-pop, K-dramas, Korean brands. It’s common to hear BTS or Blackpink playing in cafes and see Korean script on shop signs. A recent survey found over 80% of young Mongolians have positive views of countries like South Korea, Japan, and the US, and Korean and English-language media are wildly popular.

This is Ulaanbaatar in 2025: A city where Lenin’s shadow has given way to K-pop and where a statue of a camel caravan celebrating the Silk Road trade sits oddly in front of a shiny new shopping mall.

Into the Gobi: The eighth wonder of the world

After a couple of days in the capital, we met up with my dear friend and tour-guide Zolo, to set out for the mighty Gobi Desert.

We got introduced to our driver, a sturdy man who looked like he could survive in the desert with a pocket knife; the kind of skill you'll need if you spend time in the mongolian countryside, where asphalt roads are rare and Temperatures can swing from +20°C to -20°C in a single day!

As we drove out in a Toyota Hiace modified to handle the roughest of terrains, UB’s chaotic bustle gave way to vast open steppes. We were practically alone on an infinite plain under a pale blue sky.

Mongolia is nicknamed the “Land of the Blue Sky,” and it lived up to it. The horizon in every direction was an endless dome of blue, with not a single power line or high-rise in sight.

Hour after hour, we drove south, sometimes on paved roads, often on dirt tracks that the driver navigated by memory. We passed the occasional settlement – clusters of gers and maybe a lone gas station – but mostly we saw unspoiled nothingness.

Mongolia is one of the least densely populated countries on Earth. With just about 3.3 million people in a country the size of Western Europe, you can drive the distance from Sweden to Spain without seeing another soul…

When we arrived in the Gobi desert, the Khongor dunes rose before us like an golden wall. With Zolo guiding our path we climbed barefoot, slipping and toiling upward, each step forward pulling us half a step back. When we finally reached the crest, the scene was surreal: Stretching endlessly ahead were dunes shaped by fierce southern winds into an alien landscape, barren and wild, just like the sands of Arrakis from Dune.

On our third day, we reached Bayanzag, famously known as the Flaming Cliffs.

Bayanzag is where American explorer Roy Chapman Andrews discovered dinosaur eggs in the 1920s. Despite its historical significance, the fiery orange sandstone cliffs were as unexplored as when Roy set foot there, allowing us to roam freely, which felt painfully refreshing in contrast tourist hotspots like the Grand Canyon.

Mongolia today reminded me of these Flaming Cliffs: Striking, filled with unexplored treasures that could either stay this way or become as exploited as mount Fuji.

Mongolia’s shield from China and Russia: the Third Neighbor Policy

Geography has dealt Mongolia a tricky hand. Squeezed between Russia and China, two autocratic behemoths, Mongolia is literally and figuratively a democracy in a tight spot.

North lies Russia — once Mongolia’s patron, instrumental in shaping and defending its modern statehood during the communist era (see the 1921 Mongolian Revolution), now a predatory pariah, lashing out beyond its borders and threatening the fragile balance of its neighbors.

South lies China – Mongolia’s biggest trading partner and a rising global superpower that makes many Mongolians uneasy. The two share a long and tangled history, from Genghis Khan’s conquests to centuries of imperial rule under the Manchu. That tension remains palpable today, sharpened by China’s treatment of ethnic Mongolians in Inner Mongolia (now part of China), where teaching the Mongolian language was recently outlawed, a move seen as cultural erasure. Mongolia needs China’s business, but it's people hate Chinese influence.

Mongolia’s response to this predicament has been a savvy foreign policy dubbed the “third neighbor” policy. Since it has only two physical neighbors, Mongolia seeks out distant friends to act as metaphorical third neighbors. Japan and South Korea stand out as two of those key partners, along with countries like the United States and members of the EU.

Ulaanbaatar enjoys strong diplomatic ties with Tokyo and Seoul – all three share democratic values in a region where democracy is scarce. But the main strength of these ties comes from the Mongolian people. All the the Mongolians I've talked were far more interested in developing strong ties with Japan and South Korea than their immediate neighbors.

When it comes to Japan, I was constantly struck by the little connections. The fleet of Toyota cars on the streets is one obvious link. But Japan’s influence doesn’t stop at cars. Infrastructure and aid are a big part of the story. Ever since Mongolia’s democratic transition, Japan has been a major aid donor, earning a special fondness among Mongolians who often say “a friend in need is a friend indeed” about Japan’s help in the 1990s. One can spot signs of Japan-funded projects around UB, from schools to hospitals. The most monumental example is the brand-new international airport. Mongolia’s main airport was relocated and opened in 2021, a modern facility built with 93% financing from Japan’s aid agency (JICA). Not only was it financed by Japan, it’s actually operated by a consortium of Japanese companies in partnership with Mongolians. Flying into that gleaming airport is a stark contrast to the potholed road leading into the city – a reminder that Japan’s footprint here is needed and welcomed.

And the relationship goes deeper than concrete and runways. Tokyo and Ulaanbaatar inked a full‑blown Economic Partnership Agreement in February 2015, Mongolia’s first free‑trade deal with a G7 nation, which came into force in 2016 and slashed tariffs on almost all bilateral trade, binding the two economies more tightly than ever.

Similarly, South Korea’s presence is felt through commerce and culture. Strolling through any department store in UB, you'll see Korean cosmetics, Korean electronics, and even a Paris Baguette (a famous Korean-French bakery chain). South Korea, like Japan, extended a helping hand after the 1990s – thousands of Mongolians have since studied or worked in Korea. In fact, the largest Mongolian diaspora (around 50,000 people) lives in South Korea, sending back remittances and building bridges between the two nations.

Culturally, South Korea arguably outshines even Japan in Mongolia. K-dramas have been a sensation on Mongolian TV. In clubs, you'll see people singing along to K-pop songs despite not speaking a word of Korean. This “Korean Wave” (Hallyu) in Mongolia mirrors its impact in other parts of Asia, but here it also has a geopolitical undercurrent: it subtly pulls Mongolian popular imagination toward fellow democracies. Young Mongolians who adore Korean culture also notice that South Korea is a prosperous democracy – a model to aspire to.

All these soft power elements – Japanese cars and infrastructure, Korean media and consumer goods – serve a strategic purpose. It’s a reminder that dramas, boy bands, and secondhand SUVs can be a stronger weapon for forging relationships than tanks, threats and battle flags.

Mongolia's fragile democracy

Politically, Mongolia's embryonic democratic is doing remarkably well, considering their authoritarian neighbors who'd gladly see it fail. Since the peaceful transition in 1990, Mongolia has had multiple peaceful transfers of power, a lively (albeit quite corrupt) parliament, and a vocal civil society. The fact that they have maintained their democracy and independence thus far speaks to a certain stubborn resilience – perhaps inherited from their nomadic ancestors who valued freedom of movement and spirit above all.

However, for all its geopolitical savvy, Mongolia faces a classic development trap: The resource curse, also known as Dutch disease. The country sits on a massive store of mineral wealth – coal, copper, gold, uranium, rare earth's. In fact, despite its tiny population of 3.6 million, it's one of the ten most resource rich countries in the world!

These resources have powered impressive booms but also make the economy dangerously one-dimensional. Mining is the engine of Mongolia’s economy, accounting for about 25–26% of GDP and a staggering 90% of export earnings.

The term Dutch disease refers to how a resource boom inflates currency and wages, undermining sectors like manufacturing and agriculture. In UB, this is painfully obvious: During booms, shiny restaurants and luxury apartments appear, funded by mining, but most goods are imported. When the inevitable bust hits, these businesses vanish just as fast. Meanwhile, rural herders and workers see little benefit, as mines are often owned by foreign firms or a domestic elite. This imbalance fuels discontent, especially around corruption.

On our journey, we often asked Zolo about Mongolian politics. He shook his head at the mention of big mining projects, saying that ordinary people see no benefit. Instead, the political elite openly squander the nation's wealth, traveling abroad to lavish casinos, casually burning through millions in government funds at blackjack tables as though Mongolia's resources were their personal jackpot.

In late 2022, this frustration boiled over dramatically. Thousands of Mongolians braved the subzero cold to protest a massive “coal theft” scandal in December 2022. At Sukhbaatar Square, the same central plaza where democracy was declared in 1990, crowds gathered night after night, demanding the government “name the thieves” and account for missing billions from coal exports and even attempted to storm the Government Palace in frustration. It turned out that at least 385,000 tons of coal shipped to China were unaccounted for in official records, implying that politically connected insiders had siphoned off huge profits by fudging export numbers.

Mongolia's democracy might be weak, but it still works, and despite the politicians best efforts to silence the crowds, they failed. Within days, the prime Minister had to announce an investigation and arrests; by the following week, several officials and executives of the state coal company were in custody. The government even vowed to put the giant state coal mining firm (Erdenes Tavan Tolgoi) on the stock market to improve transparency.

Sitting around a campfire in the Gobi, these stories took on a new resonance. We were in a province where vast coal trucks trundle south to China, kicking up dust on unpaved roads, while locals live in simple gers, watching those riches roll by. It’s a stark image of inequality. Yet, Mongolia’s saving grace is that people can speak out and demand change. In China or Russia, protesting like that would likely be met with immediate, harsh repression. In Mongolia, the protests led to promises of reform.

The current Mongolian government is talking about diversifying the economy (investing in cashmere, tourism, IT services) and strengthening the rule of law to attract foreign investment beyond mining. There are some glimmers of hope: for example, a new electronic trading system for coal was introduced so that sales are transparent and on the record. Civil society groups and journalists are quite fearless in exposing scandals, which is a positive sign for accountability.

What path will Mongolia choose?

After days of traversing dunes and canyons, our group returned to Ulaanbaatar.

As my friends and I prepared to depart, I felt a mix of optimism and concern. Mongolia is truly an embryonic democracy, a work in progress. It has extraordinary advantages: A young population hungry for change, immense natural resources, and supportive friends in democratic nations. It also faces extraordinary challenges: geographic isolation, environmental extremes (winters of -40°C and summer droughts), the domineering shadow of China and Russia, and the ever-present temptations of corruption and authoritarianism.

Which way will Mongolia go? Standing in Sukhbaatar Square on our last day, under the gaze of the Chinggis Khan statue, I realized that Mongolia’s story is still being written and Mongolians themselves hold the pen.

No one can make the tough choices for them – not Tokyo, not Seoul, not Washington. Those third neighbors can help by investing, by educating, by simply being examples. But ultimately, Mongolia’s fate depends on the resilience of its people.

If Mongolia succeeds, it will be because of a quiet revolution, not of guns or tanks, but of youth, internet cafes, and a stubborn refusal to be anyone’s satellite.

Sources:

The observations above are informed by on-the-ground travel and discussions, as well as data on Mongolia’s economy and international ties. For instance, Mongolia’s heavy reliance on mining (about 90% of exports) is documented by trade and industry reports. The dominance of used Japanese cars (95% of imports, mostly right-hand drive) in Mongolia’s vehicle fleet has been noted by the American Chamber of Commerce in Mongolia. Mongolia’s “third neighbor” policy and its close ties with Japan and South Korea have been discussed in diplomatic analyses. The influence of South Korean pop culture and the positive perception of Japan and Korea among Mongolian youth are reflected in public opinion surveys, and the large Mongolian diaspora in South Korea (over 50,000 people) underscores the human link between the countries. Major Japanese-supported infrastructure, such as Ulaanbaatar’s new airport, was built with Japanese loans and expertise. Finally, Mongolia’s struggles with corruption in the mining sector and the public demand for accountability were vividly illustrated by the December 2022 protests over missing coal revenue and the government’s subsequent reform pledges. All these elements weave into the complex, hopeful tapestry of today’s Mongolia – a democracy at a crossroads between giants, determined to choose its own path.

The land of anime, bullet trains, and quirky vending machines has a knack for coming up with world-changing ideas, only to let someone else swoop in and reap the fame and fortune.

So let’s examine the curious case of a nation that’s fantastic at inventing, yet all too often falls flat in making its homegrown technologies a global hit:

The Selfie Stick: Invented in Japan, perfected everywhere else

Let’s start with arguably the most cringe-inducing tourist gadget in modern times!

Whenever you see tourists raising their arms to snap the perfect group shot, think of Hiroshi Ueda, a Japanese inventor who, back in the 1980s, created a telescopic rod to help him take pictures with his family while traveling. But guess what happened? Not much. The idea was there, and the patent existed. Yet, culturally, it never really took off. The patent expired, and eventually, someone outside Japan saw its potential.

The concept reemerged decades later, became a global phenomenon, and left us scratching our heads: Why didn’t the nation that gave us the stereotype of asians taking pictures of everything cash in on this first?

Part of the reason is that Japan’s market can be cautious and slow-moving, with companies sometimes unsure how to scale or market a product beyond local borders. That hesitancy left the door wide open for other firms, mostly in China, to mass-produce, brand, and aggressively market the selfie stick. By the time Japan realized it had a cultural icon on its hands, the rest of the world had already associated this tourist essential with a “Made in China” label.

The QR Code: A Japanese invention inspired by Go

Yes, that black-and-white square that you scan with your phone to open a menu or website was also born in Japan. In 1994, Denso Wave, a Japanese company, invented the QR code to track automotive components in factories more efficiently. Its design was directly inspired by the board game Go, with its black-and-white patterns optimized for fast reading and minimal errors, just like Go stones are placed with strategic precision.

But for years, the technology lingered in relative obscurity outside certain industrial environments.

Even though Japanese phones were among the first to get cameras and advanced features (please google the term “Galapagos phones” to see some of the coolest phones ever conceived), Japanese companies didn’t see the potential in QR-codes.

Instead, China drove mass adoption in the early 2010s through WeChat Pay and Alipay, using QR codes as a cheap, universal payment method complex enough to hold detailed security information. Meanwhile, Western businesses adopted them for marketing and authentication. Japan, despite its advanced mobile tech, failed to push QR codes beyond niche uses.

Then, when, the COVID-19 pandemic sealed their ubiquity, making them essential for contactless interactions.

Today, from restaurant menus to payment terminals to travel passes, QR codes are everywhere.

Yet how many people know they’re a Japanese invention inspired by an ancient board game? My guess: Almost no one…

Touch Payments (NFC)

Speaking of payments, Near Field Communication, or NFC, is the magical technology enabling tap-and-go payments on your phone, keyless entries, and so much more. And yes, this too has some of its origin story rooted in Japan. Sony developed the FeliCa contactless smart card system in the 1980s and 1990s, which provided the foundation for many modern NFC applications. Even before that, certain forms of contactless payment technology were in use in select Japanese transit systems.

But, you guessed it: Global adoption lagged because Japan never pushed FeliCa as a worldwide standard. Meanwhile, the credit card industry and smartphone makers, especially Apple and Google, bet big on NFC for payments, branding it as an innovation of their own. By the time tap-to-pay became ubiquitous in the 2010s, most people associated it with Apple Pay, Google Pay, and Visa, not the Japanese train tickets that had quietly pioneered the concept decades earlier.

Today, tapping your phone or card at a register feels second nature in many countries. Ironically, though, Japan, the birthplace of NFC, still has loads of cash-only retailers, and the lowest use of digital payments in the developed world!

So Many Other “Before-Their-Time” Innovations

It’s not just selfie sticks, QR codes, or NFC that got their start in Japan. Believe it or not, there’s a staggering list of innovations that were born in Japan that either never succeeded outside Japan or ended up overshadowed when foreign companies grabbed the limelight.

Let’s take a look at some of these underappreciated trailblazers:

1. Karaoke Machines
   Perhaps the most iconic Japanese invention that got away, Karaoke was invented by Daisuke Inoue in the early 1970s. Inoue, a musician in his youth employed in backing business people who wanted to sing in bars, invented the machine as a means of allowing them to sing without live back-up.

   

   But guess what? He didn’t patent it. Soon afterward, others modified and mass-produced karaoke systems, taking the concept global. Japan is obviously still the spiritual home of karaoke, but the inventor lost out on the billions the industry eventually generated worldwide. But he was still recognized for his contributions, and in 2004, Inoue went to Harvard University to accept an Ig Nobel Peace Prize for "inventing karaoke, thereby providing an entirely new way for people to learn to tolerate each other."

2. Emojis🥺🇯🇵
   Yes, the cute little characters that we spam in our daily texts originated from Japan. In the late 1990s, Shigetaka Kurita, working for NTT DoCoMo, developed the first set of emojis to convey emotional nuance in digital communication. But the idea basically remained a Japan-only phenomenon for years, until Apple and Google adopted the concept into their operating systems. Once emojis hit smartphones across the globe, they became an unstoppable pop-culture force. So while they’re mainstream now, few outside Japan realize the original “Kaomoji” and emoji mania started in a Japanese telecom lab.

3. The First Consumer Digital Camera

   

   While Kodak in the US gets much of the glory for pioneering digital imaging, Japanese companies like Sony and Fuji were churning out early prototypes decades ago. Sony released the Mavica (Magnetic Video Camera) in 1981, a still video camera that used mini discs for storage. Fuji jumped in with the DS-1P in 1988, considered one of the first truly digital cameras storing data on a semiconductor memory card. Despite this head start, it took companies outside Japan (and eventually a few Japanese giants too) to refine the digital camera for the masses. But that initial spark? Entirely Japanese.

4. Bullet Trains
   Japan’s Shinkansen trains debuted in 1964, setting speed and efficiency standards that mesmerized the world. Yet for decades, countries outside Japan either stuck with conventional rail or took a wait-and-see approach before eventually developing their own high-speed rail systems. The bullet train technology itself was an engineering marvel that could have been licensed or adapted in many places far earlier, but bureaucratic caution and high costs, on both Japan’s side and potential partners’, stunted its global proliferation. Ironically, some of the modern high-speed trains in Europe and China feel like they got more international media play than the original Shinkansen.

5. Sony’s Librie E-Reader (Precursor to the Kindle)
   Before the Amazon Kindle became synonymous with e-readers, Sony had already launched the Librie in 2004, three years before the first Kindle. It used e-ink technology, was sleek for its time, and worked well—for Japanese users. But limited content, a proprietary format, and lackluster marketing meant it never really took off internationally. A few years later, Amazon came out swinging with the Kindle, better distribution, easier purchasing, and a global marketing blitz, effectively cornering the e-reader market that Sony helped invent.

6. The First Mass-Market Laptop
   Toshiba’s T1100, introduced in 1985, is widely considered the first IBM-compatible laptop computer for mainstream consumers. This was at a time when portable computing was still a curiosity to most people. Despite the T1100’s significance, Toshiba didn’t fully capitalize on its first-mover advantage internationally, leaving American and other international brands to eventually dominate the laptop landscape.

7. Calorie-Counting Wearables
   Early “sports metering” devices were popular in Japan from the mid-1990s, with companies like Omron and Tanita producing pedometers and early wearable health trackers. Yet it wasn’t until Fitbit in the U.S. combined sleek design and smartphone integration in 2009 that the world truly embraced wearable health tech. Meanwhile, Japan’s advanced pedometers (some with integrated heart rate and calorie counting) stayed primarily in niche domestic markets, never pitched to a broader consumer base with the same vigor.

8. Virtual Reality Headsets

   

   In the 1990s, Japanese companies like Nintendo, Sony, and Sega experimented with virtual reality, aiming to bring immersive gaming to the masses. Nintendo’s Virtual Boy (1995) was the first real attempt at mass-market VR, promising stereoscopic 3D gameplay. However, it was a disaster—uncomfortable, visually straining, and lacking true immersion.

   Like many early Japanese VR experiments, it was ahead of its time but poorly executed. The lack of head tracking, monochrome red display, and awkward tabletop setup made it feel more like a tech demo than a true leap forward. It flopped hard, and instead of refining the concept, Nintendo abandoned it.

   Meanwhile, Western companies later perfected and popularized VR with Oculus, HTC Vive, and PlayStation VR, proving yet again that Japan had the “bones” of the technology first but failed to implement it effectively.

Why Does Japan “Suck at Implementing”?

Now, you might be wondering: If Japan is so imaginative, so cutting-edge in many respects, why does it struggle to spread these ideas worldwide? As an expert in the field of innovation, I’ve come to see a few recurring patterns:

1. Cultural Conservatism and Risk Aversion
   Many Japanese companies operate on consensus-based decision-making. While this approach can lead to well-thought-out products, it often slows down the speed of getting to market. The fear of failure or tarnishing a company’s reputation can stifle the bold marketing moves needed to capture global audiences.

2. Internal Market Comfort
   Japan has a robust internal market, meaning a successful product can do well at home without ever venturing abroad. But this can create complacency. If domestic sales are strong enough, why risk an expensive global push? This insular approach can cause Japan to overlook the broader potential of its inventions, until someone else seizes the moment.

3. Insufficient Global Partnerships
   Japanese businesses traditionally tend to focus on building long-term relationships domestically. International partnerships sometimes get overshadowed or remain limited to big-name collaborations (like between well-established giants). Smaller innovators, meanwhile, find it hard to secure the resources or networks to take their products abroad effectively.

4. Communication and Branding
   Let’s face it: marketing is as critical as inventing. Many Japanese firms (especially medium and small ones) struggle with finding the right pitch for global audiences. Language barriers, cultural differences, and an emphasis on technical specifications over lifestyle branding can prevent groundbreaking products from hitting prime-time.

5. Timing and “Galapagos Syndrome”
   The Japanese ecosystem sometimes evolves technology in isolation,tailored specifically to local needs, so inventions may not align with global norms until much later. This leads to missed windows of opportunity. By the time a product is ready for a larger market, an international competitor might already have introduced a more user-friendly or more aggressively marketed copy.

Conclusion

The irony is that Japan’s brilliance in inventing shows no signs of slowing down. The pipeline of ideas, ranging from advanced robotics to environmental tech, hydrogen-powered cars, and beyond, remains astonishing. But the question always is:

Will they stick the landing this time?

My best estimation is that Japanese innovators will find new ways to collaborate internationally, perhaps driven by younger generations more willing to take risks and adopt global-minded strategies. We already see budding Japanese startups forging closer ties with Silicon Valley, Southeast Asia, and Europe, looking to launch products abroad from Day One. And with the rise of the internet of things (IoT), 5G, and AI, we may just witness a new wave of Japanese brilliance that doesn’t merely fade into obscurity at home.

In the end, Japan will always surprise us. It may still struggle to implement some of its biggest ideas on a global scale, but it’s precisely that quirkiness, the wacky prototypes, the passion for engineering, the relentless pursuit of precise perfection, that ensures it remains a wellspring of innovation. The real shame, of course, is when those inventions don’t make it to the rest of the world, or they do but under someone else’s name.

Yet I remain hopeful. Maybe the time is ripe for Japan to finally shake off its conservative instincts and claim its seat at the head of the global innovation table. After all, if a country can dream up the QR code, perfect the selfie stick decades before Instagram, and pave the way for tap-to-pay technology, it’s only a matter of time before it fully converts this endless ingenuity into unstoppable world domination, of the friendliest, wackiest, and most fun kind, of course.