"In TOYOKEIZAI ONLINE column published" The power of rules I didn’t notice until after less than 16 years

Good morning, this is Matsushita.

Yesterday's NY Dow rose slightly,

will it aim for new highs again?

The Shanghai Composite Index extended its rally significantly.

USD/JPY is sliding to the upper 111s.

NY Gold is hovering around parity.

You may have heard the saying,

“In investing, rules are important.”

The first time I encountered this saying was

early in my investing career, in 2001,

in the book “Market Wizards.”

Almost all the great predecessors

said, “Rules are important.” So since then I

have created, followed, and traded with rules,

and I have taught them in schools.

Sixteen years have passed since then,

through tens of thousands of investors and various markets,

and I finally understand what this means.

Rules generate profits.

That is why rules are necessary in investing.

But more than that, the reason rules are so important is that

having rules enables you to continue.

Because there are rules,

you can keep trading,

and continue to earn profits.

My sixteen years of investing history

is the history of watching many investors leave after losing.

and I have continued to watch them.

Investors without rules

will immediately lose their capital.

Even when luck or favorable market conditions made some investors rich by following rules,

if their understanding of the rules is shallow,

eventually, in a period when the rules stop functioning,

they abandon the rules and lose funds.

In markets so harsh that most investors lose capital and leave the market,

rules are a precious foundation for surviving.

The longer you stay in the market,

the more you will feel this.

That is why the masters warned so strongly,

to “create and adhere to rules.”

I believe this is why they admonished so.

Our understanding of rules is still shallow.

The longer you profit consistently,

the deeper your understanding of rules becomes, and

you become an even stronger investor.

Rules are the power to generate profits.

More importantly, rules are the power to survive.

Please make sure to have and follow rules in your trading.

Please always trade with rules in place.