A Faulty Crystal Ball

"This has been a cruel year for Asian stock markets." That's what BUSINESS WEEK observed 12 months ago in our annual Special Report on global investing. But 1998 has been even crueler, making mincemeat of our advice to start bottom-fishing in Asia.

Along with many Wall Street pros, we underestimated Southeast Asia's woes, the inability of Japanese politicians to address deepening economic problems, and how turmoil in other emerging markets would affect the Pacific Rim. And while for the most part, we stuck to recommending the best and brightest companies, they were swept away with the dross. Toyota Motor Corp.'s American depositary receipts have sagged 25%, even as Camrys and Lexuses keep rolling out of U.S. showrooms. And Tokyo Electron Ltd. has plunged 60% in dollars, despite its edge in making gear to manufacture semiconductors. We figured the collapsing Indonesian rupiah would help Asia Pulp & Paper Co.'s exports. Maybe it will someday, but its ADRs are still down 50%. The lesson? When a global economic earthquake hits, it may be safest to wait for the aftershocks to end before venturing forth.