“Downdraw” featured in Toyo Keizai ONLINE column

Good morning, I am Makoto Matsushita.

On Sundays every week, we deliver columns on themes related to investing.

Today's theme is "Drawdown."

Since I began writing “Makoto Matsushita's Investment Inquiry,”

today marks the 205th column, and four years have nearly passed,

and I had not written on this theme until now.

It is an important theme, isn’t it.

As long as investors strive to continue making profits over the long term,

it is a wall that must be overcome,

so please read it.

【Column】Makoto Matsushita's Investment Inquiry

No. 205 "Drawdown"

Drawdown refers to a period when funds decrease in investing.

Of course, there are times when funds increase, but

there are also times of drawdown.

However, investors are always perplexed by this obvious fact.

When funds are increasing, they become overconfident and think profits will continue to rise,

and the idea of drawdown disappears from their minds.

When drawdown finally arrives, confidence evaporates and fear torments them.

They even wonder if their funds will ever grow again.

Thus, this investor destabilizes their own trading rhythm.

No matter what method or rules you use, the time of drawdown will come.

If the time and magnitude of the gains outweigh the time and magnitude of drawdown,

ultimately the funds will grow, and this is the rule and trading that investors should aim for.

However, investors are always subjected to the same emotional swings with the ups and downs of their funds.

I think investors are truly creatures that cannot be taught to learn.

Drawdown will come someday. Therefore, in preparation for that time,

let's make concrete preparations. Concrete preparations involve risk and position

management, and mental preparation for when money decreases.

Unless you acquire this, your heart will not find peace in investing.