- 1). Launch stock charting software. Most brokers provide to their clients proprietary software for charting stocks. But there are many free online resources as well, including Google Finance, BigCharts, StockCharts and Yahoo! Finance.
- 2). Chart a major Japanese exchange-traded fund (ETF). An ETF is a publicly traded fund that acts exactly like stock but follows a basket of stocks rather than just one company. It is easier to chart an ETF than it is an actual foreign index since the indices themselves cannot be directly traded and thus may not appear in the software. The "EWJ" ETF is the most popular Japanese ETF and it provides the same performance results as the overall Japanese stock market.
- 3). Add to the chart an ETF that represents the American stock market. The "SPY" is the most popular ETF for trading a U.S. index. It represents the S&P 500. Adding two stocks or symbols to the same chart is straightforward in most platforms. In Google Finance, all you need to do is type "SPY" into the ticker box of the chart and press "Enter." However, in Google Finance this comparison is so popular that the tool is already available. Just click the "S&P500" check box on the chart itself. An additional line is drawn.
- 4). Select the time frame for the chart. If you wish to easily see the performance difference between the Japanese stock market and the S&P 500 since the beginning of the present year, choose the "YTD" option in your charting software.
- 5). View the performance returns on the right side of the chart. When two stocks or ETFs are charted together, the price axis usually turns into a percentage-based scale rather than an actual price scale. This allows you to easily see the percentage returns of each charted symbol. According to Google Finance, as of June 13, 2010, the year-to-date returns of the two indices are nearly the same at approximately minus 3 percent. The 10-year returns however show better results in the American stock market, with a minus 21 percent, compared to Japan's minus 37 percent.
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