The events appear very company-specific. An internet business was raided amid suspi-cions of false accounting and concealed losses. Quite why this news sent such a flurry through the market is difficult to determine.One or two other concerns were emerging elsewhere. IT giants Intel and Yahoo disclosed disappointing figures for the final quarter of 2005. In the UK, the governor of the Bank of England and the outgoing deputy gover-nor expressed concern over valuation levels being accorded to some financial assets. Mervyn King’s remarks were specifically directed at the very low level of real interest rates presently applied to long-term sovereign debt. In the case of Sir Andrew Large, it was an interview he gave that appeared to include those emotive words “irrational exuberance”. Originally contained within a statement made by outgoing Federal Reserve governor Alan Greenspan in 1996, they turned out to be rather ahead of the game so far as forecasting a market setback was concerned. Coincidentally, the reference did include a comparison with Japan at the time. But things are very different now in Japan than 10 years ago. Greenspan had been alluding to extended valuation levels that had arisen following the long bull market in Japanese equities. This came to an end in 1989 and the contraction in the Japanese stockmarket was very significant. Japan proved the best developed market to invest in last year but index levels, even at their recent high, are still way below the peaks achieved 16 or so years ago. The broader economic picture has also changed. After prolonged economic stagnation, deflation and near-zero interest rates, activity is on the up. Japan is being helped by the massive expansion of China and the prosperity that is being delivered to the region as a whole. Better corporate results mean Japanese shares look as cheap as they have for a generation or more. The risks do not appear anything like as great as the market’s behaviour suggests. Then again, who can say what might trigger a bout of profit-taking? My best guess is that panicking out could prove costly. I am holding my nerve but comfortable it is not.