There are important contrasts between Japan's position then and America's now, including major structural differences in the economies, America's younger population and the Fed's rapid and aggressive response to the latest downturn. Yet some asset managers say they are bracing for shrinking investment returns ahead.

"Currently, we are advising all our clients to invest as differently as they can from the conventional 60% stock/40% bond mix, just as we were advising them in 1999," Peter Chiappinelli of investment manager GMO, which oversees about $60 billion in assets, wrote this month pointing to stock valuations that appear overly stretched and Treasurys that have grown expensive, appearing unlikely to serve as a hedge to stocks.

But after a long stretch of higher risks -- including a global trade war and election uncertainty -- the outlook is growing brighter. The election has passed, and a Covid-19 vaccine is likely soon.

Goldman sees the S&P 500 potentially ending next year at 4300, supported by a bounceback in earnings and economic activity. JPMorgan Chase & Co. forecasts the S&P 500 will jump to 4000 by early next year, an 11.8% advance from Monday's close, with a path to around 4500 by the end of 2021.

The prospect of congressional gridlock alongside Democrat Joe Biden in the White House makes it less likely big overhauls on corporate taxes and regulations will pass, resulting in what a team of JPMorgan strategists led by Dubravko Lakos-Bujas called "market nirvana" in a November note to clients.

"The equity market," they wrote, "is facing one of the best backdrops for sustained gains in years."

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com, Akane Otani at akane.otani@wsj.com and Michael Wursthorn at Michael.Wursthorn@wsj.com

(END) Dow Jones Newswires

11-24-20 1433ET