A column currently published on Toyo Keizai ONLINE: Differences in the quality of profits

Good morning, this is Matsushita.

There are two kinds of profit that investors raise.

They are lucky profits and earned profits.

Lucky profits are,

without clear targets or rules,

why profits rose isn’t even understood by the person who earned them.

They simply bought while prices were rising by chance,

or sold while prices were falling, gaining profits.

In contrast, earned profits are,

where targets and rules are set,

and profits are achieved through verification and planning.

Investors who have gained these profits

know why profits rose,

the reasons behind them.

Without rules and reasons for profits,

lucky profits are difficult to reproduce thereafter

and end up eroding capital.

Many investors who earned profits by luck

do not practice money management, so when losses or

drawdowns occur, their capital begins to collapse.

Investors who earn profits through skill

do practice money management, so even when losses or

drawdowns occur,

they eventually ride out that period and

reach a time to earn profits again.

Thus, investors who occasionally make large profits by luck

over time end up losing much of their capital and

eventually leave the market.

Investors who earn profits through skill

are not flashy, but

survive in the market for 5 or 10 years and

continue to earn profits steadily.

Sixteen years since I started investing,

investors who once made large profits by luck,

as well as those who steadily make profits year after year,

I have seen both.

There is a clear difference between the two,

and it is obvious to the eye.

Which kind of profit will you pursue,

and what kind of investor do you want to be?

If you want to become an investor who earns profits through skill,

learn from me.

I will teach you clear targets and rules,

and how to verify them.

Grow into an investor who earns profits through skill.