【Disregard for impatience is forbidden】The bottom of the Lehman period is reached after two rounds of earnings reports
Hello, this is Kaen Yamashita.
Lately, my meals have been delivery every day,
so I grew a bit tired of it and thought maybe once I’d go out to eat,
“Is there any delicious place?”
that kind of talk with my friends.
A recommended place for noodles in Shinjuku
“tsukemen” was suggested to me.
The location is toward the south exit of Shinjuku, near Takashimaya.
If you know Shinjuku, you probably have an image, but across Meiji-dori there is HIS opposite Takashimaya.
Enter the street next to HIS, and at the dead end turn right
toward Yoyogi is a single road.
After a while, on the left you’ll see the forest of Shinjuku Gyoen,
and a quiet road where you can hear birds chirping.
In contrast to the hustle and bustle of Meiji-dori, a.k.a. a back street.
There are almost no pedestrians.
Along that road, there is a famous tsukemen shop called
“Gonjin Seizakusho.”
My friend said that even after the state of emergency was lifted, it was nearly full.
Even in Shinjuku, due to the impact of COVID-19
most restaurants still had noticeable empty seats,
that is, even in that period.
It sounds like a popular place, but
when I asked about the menu...
unfortunately the “shrimp tsukemen” was the main item.
I personally am not fond of shellfish.
There were also things like
“shrimp tomato tsukemen,” and I was curious what it would taste like, but...
I gave up.
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The Herding Effect of following others’ actions
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Since seafood isn’t for me I didn’t end up going to that shop,
but even so, just from listening to the story
I was intrigued.
After all, when people gather
to some extent something that grabs attention happens.
However, the reason I’m interested is not just because
psychologically explained
there’s more to it than “it’s popular.”
Have you heard of the phenomenon called
the “Herding Effect”?
Herding means a crowd, and,
by taking the same actions as others you gain a sense of security,
and end up following others.
A long time ago, when people lived in small settlements
being ostracized meant the end of life.
There’s a theory that this is an instinct
developed by humans in those times,
but“Taking the same actions as others gives a sense of security”
is why we’re drawn to popular shops.
I don’t think I’m the type to seek security
that much, but perhaps there’s a feeling buried deep in me as well.
What about you?
Do you ever follow others to gain
a sense of security by acting the same as those around you?
For example, when choosing a laptop,
everyone around you is using it,
you might go with a Let’s Note just because others are,
something like that.
There are surely moments when you chose the same thing as others to gain a sense of security,
and probably everyone has some extent of that.
Especially Japanese people are said to have this stronger than Westerners,
you could say.
“Easily swayed”
is a stereotype sometimes said about us.
But it’s not all bad.
For example, during the ongoing state of emergency
when people wanted to play outside freely but
they restrained themselves due to others’ eyes,
many may have done so.
This “peer pressure” might have been one factor in reducing outdoor activities
under the non-punitive emergency declaration.
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The bottoming of the Lehman era took two earnings reports
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However...
Here’s the main point: in the world of investing
flowing with “peer pressure”is not completely bad, but
investors should be careful.
If many people are buying a stock
and you think, “I’ll buy this too,”
or you’re swept along by that sense of security,
you can become a victim of the market.
In recent events, since the March crash and the Nikkei’s recovery,
some may have become complacent, thinking
“it’s okay now.”There may be many who felt that way.
As the saying goes, “Time heals all wounds,”
humans tend to forget easily.
Some may have followed the optimism around them.
If you have any such memories, please be careful.
If a second wave of COVID-19 comes,
historically, the damage could be much greater.
Past pandemics may have been only precursors,
and this is something to consider as well.
In winter, there are talks of even stronger viruses
spreading, and if that actually happens
the real economy would suffer an even bigger blow.
Also, right now both the Bank of Japan and the Fed
are printing money abundantly.
It seems unlikely that stock prices are reflecting the real economy.
By the way, do you remember the stock market after the Lehman Shock?
Back then, after Lehman,
the Nikkei hit bottom only after two quarterly earnings reports were released.
Of course, there’s no guarantee this will repeat with Lehman-like effects this time,
and no one can predict how it will move.
But you should keep your wits about you at all times
and prepare to be okay no matter how the prices move.
I’m not trying to scare you,
nor saying it will definitely fall.
Don’t get swept up by others and lose sight of your own trading,
and always be ready to respond in any situation.
Please never forget this.
Thank you for viewing until the end today as well.
Keizo Shita
