If you want gloom, meticulously researched and analysed, then Andrew Smithers is your man. For years he’s been pointing out how overvalued US common stocks are, and even at the worst of the post-Lehman panic, they only reached “fair value” on his scale, rather than being obviously cheap.

But what’s this? “Japanese equities are absolutely as well as relatively good value”. What has come over the man? Western analysts have been calling the turn in Japan for years, and shares have continued to go down, but it’s something else when a perennial bear does so. Smithers points out that with the MSCI Japan index at 466 the Japanese market is selling for 70% of its book value, which brings to mind Warren Buffet’s dictum about buying quality goods in the sales.

That book value is unlikely to be overstated, since Japanese companies take a harsh view of depreciation, says Smithers, typically providing 194% of net profits after tax. The equivalent figure in the Polyanna economy of the US is 60%. In other words, Japanese profits are of much higher quality than US ones, yet the two markets are selling on similar published earnings valuations

As he concludes: “After many years selling above fair value, markets everywhere are likely to enter a prolonged period of being below it. The Japanese market may not therefore provide investors with good returns for some time, but it is likely to provide them with much better, or at least less bad, returns than will be available to equity investors elsewhere.”