Japan: low rates = stock slump?

I would like to understand why despite lowering interest rates to extremely low and cronic levels, the Japanese stock market has since '89 never had a healthy bull run. Theoretically, low interest rates cause investors to put their money in higher yielding assets (stocks). Why didn't this happen in Japan?

The key to understanding Japan's flat 18 years are the loose credit conditions and demographic peak that created their asset bubbles. I can review my trade journals from the mid 80's and recall making big money (50-100%+ before leverage) in Japanese stocks - but also seeing the mistake that it will continue. There was a headline that the value of the Imperial Palace in Tokyo was in the trillions - it exceeded the value of all residential property in Canada, and they were convinced that 'this time things were different'. ( a classic mistake). I got my clients out before the fall, just as they were out of real estate 3 years ago, and stocks 1 year ago - now shorting stocks.

The current crisis is much larger than what Japan faced, and the fallout will likely be the same or worse. Our Boomers peaked as stock buyers in 2000, and will continue to be net stock sellers for decades to come according to studies. We are 10 years behind Japan, but following in their example, but leveraged further and far more Global.

Wow, you have been at this a long time. Thanks for your response. So you are saying that despite low rates there simply weren't enough people in the right age range to buy stocks.

It's an interesting point. The changing demographics and the lack of young investors... does that mean we'll see a net sell-off in pension/retirement plans driving a bear market?

Here is a chart of the Japan spender/saver ratio over the Nikkei

Note to explain chart basis as it applies to stocks.