The term Lost Decade describes the collapse of Japan’s asset bubble and the Nikkei’s long decline after 1989.
Japan experienced a spectacular rise in land and share prices during the second half of the 1980s. The Nikkei 225 reached its all-time closing peak of 38,915.87 on December 29, 1989. After the bubble burst, stock and property prices fell, banks accumulated bad loans, and economic growth weakened.
The phrase Lost Decade originally referred mainly to the 1990s, but many writers use “Lost Decades” for the prolonged period of stagnation extending into the 2000s and beyond. It describes economic performance rather than one single trading session.
The episode is sometimes confused with Japan’s 1987 participation in the worldwide Black Monday crash. Those were separate events. The 1987 crash was global, while the Lost Decade followed the bursting of Japan’s domestic equity and real-estate bubble around 1990.