【What I want to say at the end of this year】If you do this, your trading life will end immediately.
Hello, this is Shimoyama.
I’m glad you opened this newsletter during the busy New Year’s Eve.
Today, as we close out 2019,
I want to say something to you, the trader,
that I must share with you.
Please read until the end.
As 2019 ends and a new year begins, what kind of year will 2020 be?
In 2020, many are imagining that various new technologies
will begin to spread widely in everyday life.
Many people probably image that
In reality, Hakuhodo Institute of Life & Living has summarized,
According to “Consumer-chosen ‘2020 Hit Forecast’”
the keywords that evoke technological innovation
rank highly.
(1) Tokyo 2020 Olympics and Paralympics
(2) Drive recorders
(3) Cashless payments
(4) Safety measures to prevent accidents by elderly drivers
(5) QR code payments
(6) AI (Artificial Intelligence)
(7) 5G
(8) Vehicles equipped with autonomous driving systems
(8) Unmanned checkouts, unmanned stores
(10) Consumption tax increase
（https://www.hakuhodo.co.jp/news/newsrelease/74458/
Hakuhodo Institute of Life & Living quote from “Consumer-chosen ‘2020 Hit Forecast’”
In particular, autonomous driving is prominent, isn’t it?
And the AI that supports it
also remains an indispensable keyword.
In 2019 the topic of “AI” continued to be discussed, but
in 2020 it will continue to be a big keyword you can’t take your eyes off.
By the way, what image do you have of “AI”?
From daily talks about AI,
many people hold the image of “AI =万能” (all-powerful)
and are hopeful about the future.
If you think you can master AI, you might believe business will be unstoppable,
and indeed many companies are starting to adopt AI in business.
It is certainly increasing.
But, I have one thought,
Is AI really万能?
I started wondering after
recently listening to a hotel manager’s account of using AI
on the ground.
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You cannot go against the price decided by AI
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Recently, a friend told me this story.
“The other day, I was trying to book a hotel,
and I looked at a site called Agoda, where a large room for up to three people
was incredibly cheap.
It had one single bed and one double bed, in a room for three people.
I wasn’t planning to stay with three people,
but since it was the cheapest among the hotels,
I booked it.
Then at check-in, the receptionist asked
“It’s just one person, why did you choose a 3-person room instead of a 2-person room?”
“Because it was simply the cheapest.”
※The following is a conversation between my friend and hotel staff.
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“For reference, may I ask, you’re traveling alone, so why did you choose a 3-person room instead of a 2-person room?”
“I simply chose the cheapest one.”
“As expected. Our AI determines prices, and there are times when a price
a human would never set occurs.”
“This time, too, the 3-person room was cheaper
than the 2-person room.”
“We didn’t look carefully and chose the cheapest room,
but it was cheaper than the 2-person room, huh.
Wait, can’t that price be changed manually?”
“If you ask the person in charge, AI is learning, so that isn’t possible.”
“That’s a bit problematic.”
“Indeed.”
“By the way, how long have you been using AI in your operations?”
“About six months.”
“And the profits…”
“Hmm, not much, I suppose. The person in charge said
they are still learning.”
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If you do this, your trading life ends immediately.
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People who travel frequently for business or trips probably know this well,
hotel prices vary greatly from day to day.
Typically, Friday and Saturday are expensive, and the price drops sharply from Sunday for a one-night stay.
There are many cases where the price is 2x or 3x higher.
Hotel accommodation costs fluctuate daily.
And for hotel operators,
pricing is a major source of concern.
To raise room occupancy and maximize profit, it’s critical to determine the right nightly price.
In such a context, “AI” appears.
AI, by considering various factors,
continues to present optimal prices that maximize profit.
Moreover, in real time it automatically
changes prices many times a day
according to the situation.
Being liberated from the hassle of price setting and having your sales maximized—there is no more convenient tool, is there?
With that in mind,
hotels that set prices with AI are
actually increasing gradually.
But, if you use AI, will your profits really rise?
From what I heard,
“AI is not a magic wand.”
That’s what I felt.
Of course, what I heard is only an example,
so this is not the entirety of AI, and
there are surely many hotels using AI successfully.
What I want to convey is
“Don’t overtrust AI.” This is important.
“When it comes to AI, thinking that it will always work is dangerous.
That thinking must be avoided.”
In 2020, AI, autonomous driving, 5G, IoT, etc.
new technologies will begin to spread in our daily lives,
and while it’s imaginable they will become common,
nobody knows the future.
Sometimes the result will be,
“Oh, it wasn’t as big a deal as I thought.”
There are also possibilities that the stock prices of the companies you expected will not rise much.
And, “Don’t be bound by assumptions.”
That is what I want to tell you at the end of 2019.
There is no such thing as absolutes in the world.
In trading too,
the mindset of “it will absolutely go up”
or “the Nikkei stock average will definitely rise”
will ruin you.
There is no market that will rise 100% of the time.
To be clear,
traders who are bound by assumptions are, at that moment,
losers, so
please avoid such beliefs.
Well then,
thank you for reading the final newsletter of 2019.
I appreciate it.
In 2020 as well,
with the primary theme of
I would like to continue delivering information through this newsletter.“you making a profit in stock trading,”
I hope we remain connected in 2020 as well.
Keizo Shimoyama
