What if it crashes again? There is only one way to erase fear.
Hello, this is Geshuan (Shimoyama).
Travel restrictions across prefectures have been lifted,
and people are returning to the city center quite a bit,
but in every shopdisinfectants are basically provided,
and the vigilance against COVID isnot loosening.
There are concerns about a second wave as well,
and regardless of what business you run,
it is important to utilize online as much as possible and
not rely solely on face-to-face interactions.
This will be increasingly required in the future.
When you create a website, it costs money,and some business owners may find it difficult to transition,
but
there are many who use subsidies such as the “Small and Medium Enterprise Continuity Subsidy.”
The subsidy is similar in name to the “Continuous Benefit Subsidy,”
and can be a bit confusing, but…
This subsidy,of course with an upper limit,
requires you to go to the Chamber of Commerce,receive advice, create a business plan, and
to undertake activities such as market development, which are subsidized by two-thirds.
This is.
Currently,as a COVID-19 Special Response Type,
the subsidy rate for costs related to
shifting to non-contact business models
and improving telework environments
has been raised to 3/4.
(Details:
http://www.shokokai.or.jp/jizokuka_t/
)
Already the first and second rounds haveended,
the next third round deadline isAugust 7, 2020 (postmark required).
It seems information will be officially released in early July.
Some may feel it’s a bit hard to tackle,
but
from speaking with those who used this system,
with the first round during the height of COVID,
as long as there is no fraud,
it would seem to pass.
If eligible, it might be worth using.
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Risks exist in the real business world as well
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By the way,when thinking about a business that can operate without face-to-face contact,
I personally think investment is the strongest.
In fact, I myself
make a living from investing,
and even during COVID-19 I stayed at home almost entirely,
and had no financial worries at all.
When I share such stories,people often say
“Investing is just gambling.”
and worry that
they would be risking their lives by entrusting their lives to stock prices that may change tomorrow.
Even in my Stock Academy,students have said
“Investing is gambling, right!?
and my wife told me…
so I’m doing it secretly.”
I also hear such stories.
Butthe risk is the same in the real world.
Looking at the world since spring this year, it’s obvious, isn’t it.
Even on TV news, you hear
“…but sales have plunged due to the pandemic.”
How many times have you heard that phrase?
Because of the pandemicthere are countless companies whose sales dropped to zero in an instant.
On the other hand, in investingeven if the world stops,
stock prices keep moving,
and even if they crash,holding a sell position can turn into a profit.
If you are prepared,
with one click you can respond easily,
making investing arguably less risky than real business.
I firmly reject gimmicky, gambling-like investing, but
there are methods to steadily accumulate profit while managing risk.
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Why is a crash scary? What is the source of fear?
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However, once you start investing,
many people think
“I’m so scared of crashes I can’t stand it.”
For example,
“In the middle of the March crash,if I had invested,
just imagining it gives me chills.”
Some people think this.
Recently at Stock Academy,
a student who feels fear of a crash asked for tips on how to deal with it,
so I answered in audio and shared it with the students.
Since it’s for students only,
I can’t share the specifics here, but
the important thing is always simple.
“If you’re scared, think about why you’re scared and address it.”
That’s all there is to it.
So, why do people fear crashes?
For example,imagine this:
You are now
walking down a night road relying only on a dim street light.
Ahead, in the distance, something white isfloating softly in the darkness.
You don’t know what it is,but it seems to be approaching toward you while trembling.
Your heart pounds faster,
and in the complete silence,that sound resonates through your body,
heightening your fear.
Slowly the white light approaches.
But…
When you get closer,you realize it’s just someonewalking while fiddling with a smartphone.
You’ll probably think,
“What a trivial thing.”
But peoplefear things depending on the situation.
What I’m trying to say is that,
“People fear things that are unknown,
that they don’t know how to handle,
and situations whose outcome is uncertain
and fear is stirred by them.”
The same goes for crashes.
When a crash will occur,
how far stock prices will fall,
how much you’ll lose,because the future is unclear,
fear is stirred.
So how can you erase the fear of crashes?
Should you try to predict crashes by listening to many analysts?
Well, that’s likely useless.
There may be occasional crashes you can predict,
but they don’t persist.
There is only one thing to do:
prepare in advance to respond with the assumption that a crash will happen.
So that no matter when or what crash occurs, you don’t reduce your funds,
you should be prepared.
Even if a crash happens,if you know how things will unfold,
you won’t be afraid, right?
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Tips for dealing with crashes
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Finally, I’d like to share some tips for dealing with crashes
and close.
The worst thing when a crash occurs is
holding a long position that causeshuge unrealized losses to expand.
Politically, emotionally, it’s uncomfortable to havea position at a high price lingering.
For example, when the Nikkei average is at 16,000 yen,
if you still hold a long position at 23,000 yen,
you’d be reluctant even to open the chart.
To avoid this situation…
as always, first, as a foundational rule
do not trade by only going long.
Hold short positions using margin trading as well,that is, engage in both buy and sell positions.
Since you never know when crashes or surges will occur,
you should hold both buying and selling positions normally,and trade accordingly.
Then,if a crash leaves your long positions behind,
for example,use the unrealized gains from short positions
to offset the unrealized losses of long positions.
If I were to give an example,
two short positions’ unrealized gains
could wipe out the unrealized loss of one long position,
that’s the image.
There are other patterns, such as raising the average entry price
depending on market conditions, butthere are many, and I can’t cover all here,
so please use these ideas as a reference.
In my case, I do notset losses with a single-stage exit.
The common rule in investing is “cut losses quickly,” but
instead of cutting losses immediately,
balance buys and sells well to move into favorable conditions,
and please consider this as well.
Thank you for watching until the end today as well.
Keizō Shimoyama
