If November results are poor after the tax increase, there is a possibility of entering a stock price slump.
Hello, this is Shimoyama.
Last week, the consumption tax was finally raised to 10%.
Just how far will the consumption tax go up...?
If tax revenues are not used properly,
I have a feeling they will keep rising indefinitely,
you know.
If the budget continues to be the largest ever,
well, unless they raise the consumption tax
it will be insufficient, right?
And, speaking of tax increases,
in the past, every time the consumption tax was raised
the Nikkei stock average fell.
Before the tax increase, demand surged,
and once the consumption tax was actually raised,
people held back on buying,
many companies’ earnings worsened,
and the recession lasted for a while...
that pattern kept repeating.
So, for my part,
if bad numbers come out in the November earnings report,
after that, there is a possibility that stock prices could fall,
I am assuming.
Indeed, the psychological burden of shopping
is not small, right?
People think, “It used to be available for ◯◯ yen,”
and end up
holding back on purchases.
However, in this case
perhaps there may not be such a large impact immediately
and the November earnings may not be that bad.
As a measure against the economy slowdown after the tax increase
there are stimulus measures,
so there may not be any immediate adverse effects.
Recently, I spoke with someone in the distribution business
and they said this kind of thing.
“In the past, before tax increases,
there was a flood of demand that filled warehouses,
but
this time there wasn’t a big wave like before.”
This time,
demand didn’t surge as much,
and product flow seemed to settle down.
Of course, as you can see on TV,
it is true that demand surged,
but not to the extent of past tax increases and large movements did not occur on the ground.
Looking back,
after a surge in demand before a tax increase,
consumption fell sharply after the increase, but
if there wasn’t much demand surge this time,
there may not be a large impact for a while,
Then the issue might be next year, after the return measures end.
Next year, besides the tax impact,
due to the Olympic-related demand,
real estate and related sectors are expected to be particularly tough.
Also, gradually,
signs of rate hikes are appearing in Japan,
which would also cause the yen to appreciate,
and for exporters it would be a blow.
Already the yen has been strengthening recently, but
perhaps
there could be a situation where 1 dollar is less than 100 yen.
I am assuming so.
I’ve been giving negative news that stirs fear,
but
that is only one possible scenario.
To say “the stock price will go down” is extremely dangerous, so
please be careful about that.
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October crash theory
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By the way lately in the world of investing
even for reasons other than consumption tax increases,
many people fear a stock price collapse.
In the world of markets,
there is an anomaly that
“October tends to be a month of crashes,”
and you hear stories like
“let’s trade cautiously this month.”
Indeed, looking back,
historically major crashes have occurred in October.
It’s been about 90 years, but on October 24, 1929,
known as Black Thursday
and the start of the Great Depression,
a crash occurred.
Black Monday in 1987 also occurred on October 19.
In 2008, after the Lehman Shock,
the Nikkei average fell on October 16 and October 24.
From these past examples, October seems to require caution, but...
However, not limited to October, in any month
there is always a possibility of a crash.
For example, August is a time of thin trading and is prone to crashes,
December year-end can be volatile as well,
there are other anomalies related to crashes.
Therefore, saying “October is likely to crash” should not cause panic.
No matter when or what crash occurs,
you should always be prepared to respond.
Anyway, as I mentioned earlier
about tax increases, the Olympics,
interest rates and the October crash anomaly,
none of it is predictable.
It may be possible to say such a likelihood exists,
but that’s all there is to it.
So,
to say “it will rise” or “it will fall”
is dangerous, and
if you truly want to win in stocks,
you must always think about what you will do if it goes up
and what you will do if it goes down.
That is the most important thing above all.
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Fear destroys your self-control.
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I discussed possibilities like “stock prices will fall after consumption tax increases”
and “October will see stock price crashes,”
but
when you hear these,
I think many people can’t shake the fear.
If you are one of them,
please be careful.
Excessive fear
will destroy your self-control.
From the moment you feel fear,
normal judgment becomes impossible,
and you won’t be able to keep the trading rules you should protect.
And what lies ahead is
only losses.
Therefore,
if you want to keep winning as a trader,
you need to part with fear.
But fear is a physiological reaction,
and isn’t something you can simply erase just by wishing it away.
So what should you do?
You should have the confidence that
“no matter what happens, you can be OK, and you can steadily accumulate profits.”
That is the key.
Fear comes from the unknown, so if you have confidence in your profits,
fear will naturally fade.
In fact,
members learning at the Stock Academy
have steadily accumulated profits with the confidence they gain,
trading in a state free from fear.
In fact, many members have said so.
For example, at the end of September, Stock Academy held
an awards ceremony for members who achieved
over 20% annual return, called the Warren Buffett Award,
and many expressed their joy at the event.
“I no longer feel like I’m going to lose,”
“I used to be anxious every day about whether it would go up or down,
but after encountering Stock Academy,
that anxiety is gone.”
We received many such words.
As I’ve said,
because you are constantly thinking about what you will do if it goes up
or if it goes down,
Stock Academy members can separate from anxiety and fear.
There is always negative news that tries to stoke your fear,
but please do not be swayed by such information,
keep a broad perspective
and learn to trade.
So, please enjoy today’s content until the end.
Thank you for reading.
Keizo Shimoyama
