[For Beginners] Let's understand the essence of investing! Vol. 1

I would like to upload a series where I selfishly write from my own investment experience after a long time.

Entitled,What you need to understand if you want to succeed in investing as a beginnerBefore studying tactics like fundamentals and technical analysis, if you do not understand the essence of investing, everything you do will be a waste of time.

Therefore, I would like to write about the essence of investing before studying strategies, tactics, and techniques in investing.

「You may have heard that a sense of style is necessary for investing.There are indeed moments in investing that showcase an investor's sense of style, such as accurately timing when stock prices rise or selling before a crash.

However, is having just "a sense of style" really the only important aspect?

In reality, success in investing requires more than just a sense of style, there are more essential points to consider. Understanding these can expand the chances of success for anyone in investing.

The "sense of style" in investing can be summed up in one word, "The ability to see through the essence of the market"."
In other words, it refers to the ability to determine "Is it really the right time to buy now?" based not only on gathering information but also on the information gathered.

Specifically, it includes the following three elements:

Polishing these is "Investment senseHowever, developing this leads to having 'investment sense,' which is difficult for beginners to acquire.
So, what should you do?

The answer to that isUnderstanding the essence of investment.

The 'essence' necessary for successful investment consists of the following three points.

It is important to study investment while being conscious of these three points.

First, let's take a look at "A: Do not be swayed by fundamental analysis".

「Fundamentalsrefers to the basic conditions of a company's performance, financial situation, economic indicators, etc.This refers to fundamental factors.For example, company revenue, profit margin, GDP growth rate, etc. fall under this category.

Many investors make decisions based on this information"This company seems to be growing" or "this stock seems undervalued".4. Hassle-free with regular investment

However, relying solely on fundamental analysis is dangerous.

In reality, just because the fundamental analysis is good does not mean that stock prices will always rise.
Even if a company's performance is good, its shares may be sold if the overall market is bad. Conversely, even if a company's performance is poor, the stock price may rise due to expectations for the future.

Certainly, stock prices are influenced by performance, so you should not ignore individual stocks and fundamental analysis in the first place. However, if this goes too far, it will lead to 'fundamental analysis bias disease'.Fundamental analysis bias diseaseprogresses to.

Screening over 4,000 stocks, narrowing it down to about 100 stocks and continuously focusing on the quarterly reports.
Collecting various information from company websites, magazines, and the internet, while being aware of theoretical stock prices and checking for undervaluation. Investing and trading while keeping track of quarterly earnings release dates.

This was the method I used in my twenties, spending a huge amount of time on it. It was very fulfilling and enjoyable.

But I didn't really win much (laughs).
It was enjoyable and I gained some basic knowledge, so I'll take it as a positive experience. However, in terms of time management, it's not something to be praised. In today's terms, it's 'very poor time performance.'

Stock prices depend on fundamentals.
However, I don't know how long it will take for that to be reflected in stock prices. It's common to have bad surprises come out before being rewarded.

No matter how hard you try with current information, it's quite difficult for amateurs to actualize it. Even experts cannot predict accurately within a span of six months to one year. That's how it is.It's not realistic to predict the future based on current fundamentals.That's why.

Many popular economists and analysts also predicted a recession in the USA in 2021.
Learning from past history, based on the data at that time, the US indisputably fell into a recession in 2021. However, even in October 2024, the majority of the forecasts for the USA are for a soft landing.

For three and a half years, listening to experts saying, "The US stocks are too high! It will crash in the recession!" has not allowed me to ride the stock market high since 2023.If I had blindly believed what the experts were saying, "US stocks are too high! It will crash in the recession!", I wouldn't have been able to capitalize on the stock market rise since 2023.If I had blindly believed what the experts were saying, "US stocks are too high! It will crash in the recession!", I wouldn't have been able to capitalize on the stock market rise since 2023.

Even if us individual investors approach this seriously from a fundamental standpoint, it is almost always not rewarding.

Individual investors'Like Shunya Imura, it is said that outstanding sense and a 'perverted' level of dedication are needed, as well as time, to be successful in fundamental analysis.Just like veru inc, the time and dedication required for fundamental analysis may prevent you from succeeding.

If you make a mistake here and dedicate time to fundamental analysis, you will end up wasting time.

Leave the medium to long-term fundamental analysis to experts, and it is best to take their advice with a grain of salt. They are in the business of 'financial estimates,' whether right or wrong, and basing your investment or trading on those estimates ultimately leads to a fifty-fifty outcome.

There is a saying 'Do not fall for individual stocks,' but more importantly, 'Do not fall for economists or analysts.' However, it is good to refer to them.

While events are enjoyable and I occasionally attend for relaxation, constantly watching various lectures, seminars, and live videos of well-known economists' predictions will not lead to success. This I can assure you.

Thus, the actual essence is not wasting time on unnecessary information gathering or high-level fundamental analysis.
If you are studying, you should analyze candlestick charts to be able to time your investments. That way, it is still more accurate. Typing speed is also overwhelmingly good.

This is literally the title itself.

Even if they are 'good stocks', the stock price does not always keep rising. Stock prices fluctuate up and down. In other words, when investing, it is more important to 'buy and sell at the right timing' than 'select good stocks'.

This applies to long-term investments as well.

「If it's for long-term shareholding, it doesn't matter where you buy.Anyone saying 'It doesn't matter if you hold long-term shares' is a person who cannot win 100%.

Fundamental analysis is effective for "selecting good stocks".
However, you already understand, don't you?

Again, in order to determine "when to buy" and "when to sell" the stock,It is important to use candlestick charts.It is.
It's not about winning with charts!
Fundamentals are a waste of time! In reality, there is no tool better than candlestick charts!

Fundamental analysis is used to narrow down "investment-worthy stocks" and "stocks with a high probability of winning" based solely on current performance and expectations.

Stocks should be analyzed with fundamentals, charts are irrelevant.
Experts may say things like this, but that requires knowledge, experience, and data at a level where you can win with fundamental analysis alone.Real experts.There are only a few. Well, almost none...

Fake experts and amateur individual investors probably cannot win with fundamental analysis only.

The more knowledgeable one is about investing, the more likely they are to fall into this trap. It's something to be cautious about. Despite having knowledge, they might not win at investments at all...

Whether you realize this essence or not. I realized this after switching to trading tactics with options in my 40s.
Because I only look at the Nikkei average, individual stock selection and earnings are no longer relevant, but my performance has improved more than when I was doing swing trading with individual stocks.

By focusing only on the Nikkei average chart analysis, I realized the obvious fact that timing is crucial in the market.

Of course, the fact that I lacked the sense for individual stock swing trading was also a factor.

Long-term investment is a series of short-term investments. I would like to write about the essence of that next time.