What to watch out for now — the first “sale restriction” since the listing
Hello, this is Shimon.
Last week, there was reporting about a ban on selling (short selling).
“Aiming for the price movement twice that of the Nikkei Stock Average,
and operating accordingly
the NEXT FUNDS Nikkei 225 Leveraged Index ETF
(Nikkei Lever) has prohibited new short selling starting from the 16th
and became a ‘short sale ban’.”
https://r.nikkei.com/article/DGXMZO61613920W0A710C2EN1000
Nikkei, The Nikkei Newspaper ‘Scramble’
July 16, 2020, 21:47 distributed
The short-selling restriction on “Nikkei Lever” is the first since this ETF was listed,
but in investment,
“anything can happen.”This news makes us feel that
the background of the ban is that
individual investors’ selling demand is rising, but
many investors think
“the price will fall again.”
Among the readers of this newsletter,
there are surely many who think “it will fall again,”
and trade with that belief.
As for me, as I’ve conveyed in this newsletter,
I trade from a long-term short perspective.
However, from a supply-demand balance viewpoint,
“if short positions increase, it becomes harder to fall.”
So caution is necessary.
Over time, there will inevitably be a buyback for shorts, limit downside.
which will
In the investment world,
the more people think “it will fall,”
the less it actually falls,
which is also a fact.
Therefore, the important thing is not to
decide firmly that it will absolutely fall!
and not to cling
to biased trading on one side.
That would be gambling.
Also, as in this case with a “short sale ban,”
new short selling can be halted, so
in that sense too,
you should balance buys and sells in your positions.
Many investors are looking to cut losses as early as possible,
but
for those who invest aiming toProfit by balancing buys and sells,
the situation of only being able to buy new positions
is quite disadvantageous.
In any case, if you trade according to the considerations just described
with risk hedging, you won’t incur large losses,
and you won’t lose.
Once you can trade without losing,
you simply think about how to grow profits.
Please take this as reference.
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The moment you think you can make money, you slip
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One more thing,
I have a thought about the current market conditions.
There are many private investors aiming for big gains from selling, but...
it feels dangerous.
As a human psychology
the more we imagine a wonderful future,
the more likely we are to take risks.
That is the psychology.
For example,
if someone says,“If you invest 1,000,000 now, you’ll gain 10,000,000,”
and presents it convincingly,
you might think,
“I’ll invest 2,000,000,
no, 3,000,000,”
and later regret not investing more,
and you might think that way.Some memory of this likely exists.
To a greater or lesser extent,
you may recall thinking of similar things.
When you imagine a wonderful future,
your feelings grow large,
and you cannot assess risks normally.
It’s not that you are at fault;
it’s due to how the brain works,
and it happens anyway.
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In this area,
just expecting to win money activates
the part of the brain called the nucleus accumbens.
Amanda Ripley
‘Judgment for Survival, Actions That Survive’ (Kobunsha)
First edition, December 25, 2009
P.102 quote
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This was written,
but once you think “it will make money,”
the nucleus accumbens in the brain
becomes activated,
and you become risk-on,
which is inevitable.
By the way,
casino operatorsutilize this mechanism well.
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So, it’s enough to make people expect to win at the casino —
even if they have never actually won.
If so, why do casinos offer inexpensive meals, free drinks,
bonus points,
surprise products,
and other small perks?
The expectation of those perks activates the nucleus accumbens,
leading to greater risk-taking.
Amanda Ripley
‘Judgment for Survival, Actions That Survive’
Kobunsha, 2009, first edition,
P.102 quote
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“Just excite them with expectations”
That alone swells customers’ fantasies and
causes more money to be spent automatically.
The more you play,
the more you can eat tasty free food,
stay in luxurious hotels for free,
feel like you gained a lot,
and end up overspending at the casino
more often than not.
But in the end, you’ve gained nothing or worse.
Sorry for the detour, but,
please pay attention to the activation of the nucleus accumbens.
That said,
it’s hard to notice your own heightened emotions.
So if someone nearby can objectively examine your thoughts,
that would be good.
Someone who can warn you without bias like,
“Aren’t you getting a little too carried away?”
would be helpful.
With that,
thank you for reading to the end today as well.
