Markets: The Little Guy Is Back; Burned by the bust of 1999, individual investors are now returning to the Tokyo bourse, drawn by signs of recovery.

Byline: Kay Itoi

Kaoru Muramatsu is surprisingly typical of the new Japanese market-mom. After packing her three kids off to school, the 37-year-old housewife in Hamamatsu, in central Japan, rushes to finish the chores so she can get to the computer by the time the markets open at 9 a.m. She swaps tips with other investors and checks her stocks--mainly small-cap start-ups in the tech sector--daily. "It's fun to watch the stocks go up and down," says Muramatsu, who has, in reality, yet to experience a fall. Since getting into the market last year, she has tripled her investment of about 3 million yen. Still, she notes, "some others have done a lot better."

Ordinary Japanese are rediscovering the stock markets. They fled after the crash of the late '80s, leaving the game to Japanese banks. But the number of company stocks held by individual investors has risen for eight straight years to a record high of 34 million, up from 27 million in 1995. Increasingly convinced that a two-year-old recovery portends a genuine turnaround, Japanese individuals raised their investments by 36 percent last year to 75.6 trillion yen, a level not seen since the tech bubble of 1999. Moreover, burned by "professional" advice in the '80s, the latest wave has a new approach: alone on the Net. For women in their 20s and 30s, online investing is now hip. "They think it's cool to be in charge of their finances," says financial adviser Ikuko Osada.

This boomlet springs from the "Big Bang" reforms in the late '90s, which--among other things--gave birth to online brokerages. There are now 55 of these firms, accounting for 20 percent of the volume on domestic exchanges, up from 5 percent in 2000. Fed up with ultra-low interest on bank and postal-service deposits, Japanese are now reconsidering stocks. They helped lift the value of shares traded in the six months through ...