Looks like the fast money is taking it on the chin. The quarterly earnings crowd is heading for the exits. The Nikkei is down 15% in eight trading days.

At a hedge-fund conference in Las Vegas last month, Michael Novogratz, a principal at New York’s Fortress Investment Group, called Japan “the most exciting place to invest in the world.”

Now, following four stock-market routs in the span of less than two weeks, Japan has become one of the world’s scariest places to invest, and foreign investors are caught in the middle.

After a 512.72-point drop yesterday, as evident on a market display in Tokyo, the Nikkei Stock Average was back to mid-April levels.

Hedge funds and other overseas buyers pumped more than $25 billion into Tokyo’s stock market in the seven months before the Las Vegas conference, according to EPFR Global, which tracks such flows. They were lured by a new government’s plans for radical action to boost Japan’s economy after two decades of stagnant growth and falling prices known as deflation.

The bet paid off big, at first: The benchmark Nikkei 225 index soared 83% over the seven months to late May. Foreigners fell in love again with a market they had long ago left for dead.

Then, the rally turned with a vengeance. The Nikkei sank 7.3% on Thursday, May 23. It fell 3.2% the next Monday, 5.2% the following Thursday and then 3.7% on Monday of this week. It has fallen 15% in just eight trading days. Mr. Novogratz didn’t return phone calls seeking to determine what he has done with his investments.