Truth about U.S. stock investments from Shinshin Kawada: "U.S. Stock Investing Course Trained by the Media" [Vol.23] Distributed on November 15, 2021
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Delivering the truth about U.S. stock investments
Shigenobu Kawada's "Training in U.S. Stocks with the Media"
［Vol.23］ Distributed on November 15, 2021
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＊＊＊Table of Contents＊＊＊
Market Review
This Week's Highlight!
This Week's Picked Articles
Investment Tips
Kawada's Walk
Activity Information
Q&A
The November 29 issue is a休刊 (no issue)
Pace-maker to reach 20,000,000 yen
Source: Financial Services Agency; asset management simulations prepared by Exe Trust Co., Ltd.
Note: The figures above are simulations and do not guarantee future results. Fees and taxes are not considered.
How to Read: Assumed Return and Target Year
3–4% over 30+ years: wrap funds or balanced funds fit this
5–7% still takes about 25 years: this is how non-U.S. stock funds might look
8–10% about 20 years: a modest view of S&P 500 growth suggests this
S&P 500 Performance History (Dividends reinvested, 1970-2021)
Achieve 20,000,000 yen early with proper risk taking
Kawada's message is extremely simple. To reach 20,000,000 yen, have as much as possible of your excess funds work efficiently. To do this, participants must correctly understand risk and reward. Before you read the weekly newsletter, glance at this table to confirm the correct investment attitude.
Now, start the countdown to 20,000,000 yen right away!
Online Salon "Wealth-Building Salon Where Dreams Come True"
This online salon is for learning and mutual inspiration to help you succeed in asset formation. In addition to content not fully conveyed by the popular newsletter "Training in U.S. Stocks with the Media," member-exclusive seminars on U.S. stock investments will be offered.
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1 Market Review (Nov. 8–Nov. 12)
＜Major Indices＞
・Dow Jones -0.6%
・S&P 500 -0.3%
・Nasdaq Composite -0.7%
＝ Quick Version ＝
Positive expectations for the infrastructure bill led to all-time highs on Monday, but long-term yields rose after inflation data and then fell. After the bond market holiday on the 11th, yields stabilized and the indices closed slightly lower than the previous week.
＝ A Little More Detail ＝
The $550 billion infrastructure bill passed the House, fueling optimism and lifting infrastructure-related cyclical stocks, with the major three indices extending gains on Monday. With earnings season nearing its end, investors shifted gradually toward economic indicators, but October's Producer Price Index was broadly in line with expectations, while Wednesday's Consumer Price Index rose 6.2% year over year—the largest since November 1990—raising inflation concerns, causing long-term yields to rise and sending growth stocks lower. On Friday, the University of Michigan Consumer Sentiment Index hit a decade-low, showing that consumers were worried about rising prices; however, since long-term yields did not exceed October levels and stabilized, sentiment improved in the latter part of the week.
S&P 500 Chart: Last 1 Year
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2. This Week's Verdict!
This is a corner where we deliver information you should definitely know.
Rising interest rates lead to declines
Last week, the record high that had persisted since the end of October stopped rising, marking a weekly decline for the first time in six weeks. The trigger was price statistics. The October Producer Price Index (PPI) released on Tuesday rose by 0.6% from the previous month, in line with market expectations, but the October Consumer Price Index released on Wednesday rose by 0.9% from the previous month, well above the market expectation of 0.6%, and on a year-over-year basis it was up 6.2%. This is the highest level since November 1990, a 31-year high.
In response to this, the bond market pushed long-term rates up by more than 0.1 percentage point, causing stock markets to fall. After yields settled, equities recovered, but since Veterans Day fell on Thursday and the market was approaching the weekend, the full bond-market reaction may come later. In the long run, however, it is fine to invest in companies that can generate returns higher than the interest rate; the U.S. economy, with its ability to raise rates, should remain healthy.
An investment stance that remains unfazed by rising rates
Now, in response to the CPI release, there were comments recommending a defensive investment stance due to inflation and stagnation concerns. What to note is that implementing such practices dynamically is the job of institutional investors; ordinary investors would find it quite challenging and costly to do so. Institutions aim to beat the benchmark by only a few percent, while ordinary investors should not need to expend precious time and energy for that purpose.
From a long-term investment perspective, one might think, “We were worried about deflation not long ago, so why worry about inflation again?” In other words, it is the job of strategists and commentators to express concerns, so staying the course with core investments through index-fund dollar-cost averaging is essential, and not be swayed by such concerns.
Heading toward the holiday season
Starting this week, major retailers’ earnings will begin to come in on Tuesday with Walmart and Home Depot. In addition to sales, attention will be paid to how supply-chain disruptions and a tight labor market are affecting retailers’ profit margins and outlooks. Retail sales for October will also be released on Tuesday. And next weekend is Thanksgiving, a season when consumer trends become a market theme.
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3. This Week's Picked Articles
A corner that selects and ranks information useful for asset formation from what I have gathered, with very personal commentary.
【1】 Nikkei Excessive exercise of voting rights—Shareholders' “right to speak”11/8
When asked “Whose company is it?” many would answer “It belongs to the shareholders.” But shareholders are owners of the shares, not the company’s masters.
In Europe, the concept of shareholders has a different name from the owners of the shares. In the UK, the company is called “company” (friend, partner); in France, shareholders are “associe” (members of the community). The aim there is to emphasize people as a basis, not just money.
To speak of the corporation merely as a money-holder would reflect a U.S.-style mindset in which money alone governs corporate decisions. This is not desirable.
Even in Europe, the saying “the company belongs to the shareholders” reflects a belief that individuals as citizens—voters in civil society—are the owners. Ideally, democracy in civil society is supported by corporate society driven by shareholders.
Belgian corporate law allows the voting rights of shareholders above a certain ownership threshold to be reduced proportionally. France and Germany also have mechanisms to cap voting rights. In Europe, the idea that money dictates voice has been reconsidered.
If funds that neither produce goods nor services nor interact with employees or consumers govern society, it would be a degradation of human society.
In recent years, Japanese corporate governance has increasingly protected shareholders’ interests. However, it is urgent to reconstruct corporate law so that only qualified shareholders can speak, returning to common sense.
Tatsuo UemuraWaseda University Law graduate, PhD in Law. Specializes in corporate law and capital markets law
【Kawata's Comment】
If investors receive ample returns, activists might not even come. If returns are insufficient, will management and employees do their best and shareholders endure? (See later [4] Nikkei—Crossroads American entrepreneurial spirit, 2021/11/11)
Activists sometimes propose better improvements and methods to the company.
It seems Uemura believes the U.S. system is superior to Europe’s, but France’s market capitalization is only about 3% of the world. If that system were so wonderful, France would be using its stock market more effectively. Perhaps Uemura distances himself from direct finance as a system?
In reality, Japanese companies have transformed the corporate community into mutual-aid groups among employees to maintain employment. In shareholder structures, non-traditional voices from banks and between corporations had strong influence, not seeking pure economic returns.
This tends to deter ordinary investors who expect straightforward investment returns. As in Kikuchi’s book title (The Shock of Activists: Savior or Plague?), Japan needs more activists. Otherwise, discipline will loosen and competitiveness will decline, risking falling further behind the U.S. and China. Japanese tend to be programmed to set goals for themselves less often. They rely on external pressure and external forces. In any case, ordinary investors should not approach Japanese stocks too closely.
Global market capitalization shares
As of September 2021
Source: https://www.msci.com/documents/10199/8d97d244-4685-4200-a24c-3e2942e3adeb
【2】 Nikkei Digital defeat—people and speed: Japan’s “Lost 20 Years”—Google reveals user-centric approach11/9
From interviews with Japanese employees who chose to work at the then-emerging Google, this article explores factors behind the 20-year digital defeat.
During the job interview about 20 years ago, the person interviewing said, “The person sitting in front of you turns his head 3 to 4 times faster than you.”
After joining, the biggest shock was that “everyone speaks bluntly.”
The core is “how to create value for users.” This is distinct from the producer’s perspective that good products sell well.
Those involved describe Google as fast. “We just keep doing it…” The speed of service expansion was stunning.
Another difference is the scale pursued. Mr. Imaizumi, who joined Sony in 2008, was surprised by Google’s optimistic belief in “making the world better through technology.”
【Kawata's Comment】
America’s diversity and emphasis on individual ability are strong. If you asked my daughter, it’s apparently quite a hurdle for even American university grads to land jobs at Alphabet or Apple.
There are many excellent Japanese people too. Yet in sports like soccer, baseball, and tennis, not enough are exposed to diverse environments from a young age. In Japan, a naive pathway to elite status often becomes a hindrance when competing abroad.
For example, Ichiro rose by combining exceptional talent with meticulous preparation from his first year; even Ohtani blossomed in his fourth year. Some may look down on Hase, but that’s not how I see it. In sports, talents worldwide compete. If you have ability, you aim high, right?
The same applies to business, but unlike sports or arts, if one struggles with English, it’s hard to compete. Today’s youth should not be engaging in low-level English or business communication as we did on expatriate assignments.
【3】 Nikkei The Painful Reform—Don’t Avoid the Debate11/10
This country has not been growing economically. Real GDP at the start of Abenomics in 2013 is almost unchanged today.
Yet employment has risen by about 4.5 million. Thanks to extending retirement age, elderly employment has increased. The Cabinet Office says “Total employment income is rising.”
Still, people in this country remain kind to each other and avoid intergenerational conflict. The working generation and the elderly share a small slice, and social security costs have risen accordingly. They chose to become equally poor. They chose to become equally poor.
【Kawata's Comment】
I like “choosing to become equally poor.” Politicians probably cannot say this in elections, but at the citizen level, isn’t this a topic worth discussing?
Will the United States allow a small, capable, motivated minority with opportunity to go farther? I once wondered, “One person’s step or a hundred people’s steps?” as a youth.
In domestic business conditions, the trend toward “becoming equally poor” may not be changeable. However, if one includes U.S. stocks, individuals can somewhat improve this situation.
To invest in U.S. stocks or not? About 20 years ago, most people didn’t know about U.S. stocks or wouldn’t listen even if they did. Since then, some knew but questioned their usefulness.
Even today, many people do not invest in U.S. stocks by choice. Such people should not shout for “dividends” or “abolishing the consumption tax.” Our self-help should start with investing in U.S. stocks. Oh, I got carried away again.
By the way, this line “choosing to become equally poor” reminded me of “Yet the Japanese chose war” – Yoko Kato (Author), a book based on Professor Yoko Kato’s lectures to high school students at Seiko Gakuen in late 2007. Seiko Gakuen has many students with plenty of capacity. I, in my school days, did not.
【4】 Nikkei America’s entrepreneurial spirit11/11
Attended the 40th anniversary reunion of Harvard Business School. Not only the active role of women alumni, but also that the deans are Indian two generations in a row—this vividly shows America’s diverse social power.
Anonymous surveys of alumni: 55% are still actively working. Notably, 78% had started their own companies. The industries span far beyond high-tech.
Meanwhile, the gap between the U.S. and Japan in economic power is widening. The roots of this widening gap lie perhaps in American entrepreneurial spirit.
These alumni founders are not merely greedy for wealth. Only 13% said becoming rich was most important; 45% value social contribution through business, 41% devote substantial time to non-profit work, and 14% plan to donate most of their wealth to charities. They are quite altruistic.
Career advice for new graduates with MBAs: only 11% recommend investment banking, 18% management consulting. The largest share says, “Start a business.”
(JPH Chief Executive Officer
Hideomi Aomatsu
1977: Graduated from Hitotsubashi University, Faculty of Economics. Joined McKinsey & Company (Tokyo). After consulting practice, studied at Harvard Business School. Worked at World Bank, then returned to McKinsey, JP Morgan, and the Rothschild Group, and founded Active Investment Partners in 1999. Currently, President and CEO of DRC Capital Co., Ltd. Part-time lecturer at Kyoto University Graduate School of Management.
【Kawata's Comment】
Completely agree. However, this person likely did not start his career at a traditional large company right after graduation. He seems to have pursued a unique career path.
I want more of Japan’s youth to start businesses. Building a company is work and costs; experience paying rent and expenses on weekends or holidays is valuable. Also, forming relationships built on the company’s title can change; that is a learning experience. I also want to say, for myself, “Young people, start a business,” and “Older folks, stop relying on companies!”
By the way, his book jacket for Corporate Value Lectures says, “The best defense against hostile takeover is to maximize corporate value.” While Uemura-sensei’s praise of the European system’s harmony and humanity is nice (Kawata’s interpretation), I think fighting for recognition will always be part of human nature, and I, personally, believe in that.
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4. Investment Tips
A corner that not only covers “investment methods” and “stock picks,” but also writes about “interesting indicators and statements” and “social and political movements.”
Next year’s market outlook
On Wall Street now, strategists and analysts must be busy preparing next year’s outlooks and forecasts. In this column, I will continue to update future market perspectives as they evolve.
1) Reconfirm that U.S. equities do not fall easily
First, refer to the performance of the S&P 500 with dividend reinvestment (1970-2021) at the top of this newsletter.
On an annual basis, U.S. equities decline roughly once every five years. The last drop was about 6% in 2018. Also, it is typical that the president’s second year is not particularly strong. Next year, after three strong years since 2019, will there be turbulence? No clear clouds yet; fundamentally, a bullish stance seems fine.
2) S&P 500’s 10-year returns vary
From 2001 to 2011, there were two major declines (IT bubble burst, financial crisis). Since 2011, the decade was strong. It is hard to find a period of about ten years with poor performance. Therefore, hold steady long-term and do not run from the market.
S&P 500 index, 10-year returns (1940–2020)
(Note): Return “2020” means the annual return from early 2011 to end-2020
3) Expect a rise in short-term rates from next year
Forecasts for FF rate indicate two hikes in 2022 are market consensus. Inflation will determine the pace, but investors have already priced in a rate rise. Even if economists and strategists shout about risk, there is no need to panic.
FRB policy rate and S&P 500 index trend
4) Corporate earnings remain solid
Demand after the recovery from the COVID crisis and the accelerated digital transformation (DX) have reshaped economies, driving strong demand for semiconductors and electronics using them.
Japan’s economy is weaker, with seniors crowded in workplaces and distributive pressures; yet do not assume the U.S. or China are simply lying down. The U.S. is striving to maintain supremacy, and China pursues “common prosperity.”
These two countries act differently from Japan's excuses. American corporate leaders are compelled to work for shareholders. Even if earnings cannot be expected to improve as much this year, being pessimistic is not wise.
■ S&P 500 component companies’ quarterly EPS year-on-year growth
■ U.S. corporate earnings (quarterly, as of Oct 29, 2021)
Trends in EPS of S&P 500 component companies
■ EPS of S&P 500 component companies
5) Price-earnings ratio (PER) generally contracts when interest rates rise
As of Oct 29, 2021, the 12-month forward PER for the S&P 500 stood at 21.4x (Refinitiv-based forward EPS).
This level surpasses the long-run average of 15.6x since 1986 and the 18.2x since 2016. Although many U.S. companies faced earnings pressure from COVID-19, markets have priced in a recovery, implying the high level is sustainable.
6) A shrinking PER can be positive if profits rise
The earnings yield of the S&P 500 (EPS divided by price) was 4.667% on Oct 29, 2021. Meanwhile, the U.S. 10-year Treasury yield has been trending down since 2019, then rose after fall 2020, and stood at 1.558% on Oct 29, 2021. The relative advantage of stocks remains, with no overvaluation.
Weekly U.S. Stock Outlook(Nomura Securities Information Dept.) Weekly Newsletter
7) U.S. stocks have seasonality
Typically, volatility occurs around February, followed by a rise. Summers are flat, autumn volatile, and year-end market gains are common.
S&P 500 average returns over the last 20 years
8) Stocks can fall
Occasional 10% declines occur, but falls of 20% or more are rare. In the last ~20 years, there were two times when prices halved from peaks, yet they recovered to new highs afterward.
Recent crash periods: S&P 500 declines during IT bubble, subprime crisis, COVID crisis
Declines since 2007 2007 period
9) Strategists’ forecasts have been too pessimistic recently
The red box in the figure shows strategists’ forecast ranges for year-end prices in Barron’s Digest’s year-beginning plan. Over the past three years, their forecasts have generally been more conservative than actual year-end stock prices, and almost all have missed. While predicting a COVID scenario was difficult, they may have misjudged the impact of lower rates and DX. They can only input what data can be quantified. Reality is always smarter and faster than them.
10) The Nasdaq-100 leads among major indices this year
Market focus often centers on value vs growth, large vs small, and hot sectors. Yet since 2005, the Nasdaq-100’s large-growth stock performance has been strong. Don’t judge U.S. equities by the Dow Jones Industrial Average’s morning report alone.
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New Series “Everything You Need to Know About Building Wealth with U.S. Stocks”
Introduction
This time, I’m starting a serial that covers essential basics for asset-building. Here is the overall structure I’m considering:
What era are we living in? Part 1 of 2
Independent Japanese people and essential asset formation for independence—Part 1 of 3
Is the stock market only in the United States? Part 1 of 2
Differences between Japanese and U.S. stock cultures
Key features of the U.S. market you should know
What is the S&P 500
Why is the United States strong
Recommended investment strategies—Core and Satellite
Core investment strategy
Satellite investment strategy
What should you buy
Information sources and investing
Episode 3: Is the stock market in the United States the only one? Part 2
“The Destiny of Long-Term U.S. Stock Market Rise”
■ Before being sure of the long-term rise of U.S. stocks
“The Destiny of Long-Term U.S. Stock Rise.” Destiny? It sounds bold. You might wonder if Kawata is okay. But I am serious. From my perspective, this is the only way I can see it. Of course, academically, there are many possible critiques, but for asset-building, I believe my view is quite persuasive. It has taken time and there have been many failures to get here.
■ How I came to U.S. stocks
I started my career in private client services at a major Japanese securities firm, then moved to underwriting and, later, studied at an MBA in the U.S. and encountered U.S. stocks during a posting in New York. So for the first five years after joining, I worked in Japanese equities as a sales representative and, in the underwriting division, on the financing side of listed companies.
There, I studied capital markets in an MBA program and was assigned to U.S. stocks in New York. Later, I led Asian equity sales in Hong Kong and Singapore.
My understanding of U.S. stocks deepened in the late 1990s while watching the U.S. IT boom from Hong Kong and Singapore. Although I was in charge of Asian equity sales back then, I constantly urged my subordinates to embrace the dynamism of U.S. equities.
After the IT bubble burst in 2000, I left the brokerage and went independent. My own portfolio suffered significant losses and I had to sell. I began portfolio management again in 2005 and have continued since. I also endured the 2008 financial crisis, but because of what I learned in the IT boom, I did not consider selling positions.
■ Why do they keep rising?
I have been tracking performance since 2005, now in the 17th year, and I have no plans to reduce current positions. I still earn an income from work, so selling is unnecessary. I’m convinced that simply holding will increase assets.
Why are U.S. stocks so resilient—so capable of recovery? Even I, who believes in the long-term rise, feel a sense of awe watching the market now.
■ The sense that U.S. stocks reflect economic policy
If you recall, around the 2008 financial crisis I began to adopt a “long-run rise of U.S. stocks” creed. Why? Because unlike the IT bubble where I cut and withdrew, during the financial crisis my portfolio, which had suffered heavily, recovered and even surpassed indices without any action. Since then there have been several sharp declines in 2011, 2015, 2018 autumn, and 2020 spring, but prices ultimately reached new highs again.
Long-term stock market rises reflect economic fundamentals and corporate activity, yet I also think this sustained uptrend spurs U.S. economy’s vitality.
In other words, when you create a favorable environment for rising stock prices, capital flows, companies invest, business performance improves, investors reward that improvement, and stock prices advance in a self-reinforcing cycle. I strongly feel this linkage between economic fundamentals and stock prices in the U.S.
World market capitalization shares
As of September 2021
Source:https://www.msci.com/documents/10199/8d97d244-4685-4200-a24c-3e2942e3adeb
■ Direct vs indirect financing
Now, before delving into why U.S. stocks are destined to rise, let me briefly recap.
You may know that finance broadly splits into direct finance and indirect finance. Japan is largely bank-centered indirect finance, and Europe shares this trend. The United States actively employs direct financing using stocks and bonds. As a result, when you compare stock markets globally alongside economic size, the United States stands out.
So why can the United States utilize stock markets so boldly and effectively within its economic system?
A stock market requires social infrastructure, economic scale, capital accumulation, and the income and intellectual level of individuals to operate a high-functioning market economy.
In reality, stock markets exist mainly in Western developed nations, Japan, and some emerging markets. Among them, the U.S. market accounts for nearly 60% of global market capitalization, while others share only a few percent each.
The introduction of stock markets can widen income inequality by enriching a small group of wealthy people, inflame speculative sentiment, and destabilize the real economy with excessive leverage, which is sometimes claimed.
■ Europe’s mainland and Japan say NO to “money rules all”
Mainland Europe’s major markets are not very large. In Germany and France, the financial system is bank-centered and indirect financing dominates.
Why is indirect financing dominant? It likely relates to each country’s history and governance. My view is as follows:
Direct financing—issuing stock or bonds directly to investors—gives more freedom to investors and issuers than indirect financing. Therefore, the power of money in indirect financing becomes more important. In direct financing, money can wield excessive influence to challenge existing orders.
In mainland Europe, financial activity is rooted in history, culture, and respect for existing orders, along with the state’s role in guiding economic development. Japan also exhibits this tendency.
Capital flows: Japan, the U.S., and Europe, August 20, 2021, Bank of Japan Research and Statistics Department
【Private non-financial corporations’ financial liabilities structure】
■ It is wrong to threaten the establishment with money!
In both Europe and Japan, it takes enormous energy for new money to threaten the establishment and for those in power to resist. Hence, if possible, the establishment absorbs the impact through banks first, relying on indirect financing that aligns with policymakers’ intentions to nurture industry and maintain social structures. This is a system where state involvement, under the banner of monetary and industrial policy, increases private involvement and control.
■ Stock markets presuppose private property
Regardless of direct or indirect financing, capitalism rests on private property. The United States is the country that most respects private property.
In the U.S., both the government and the private sector believe that investors will identify the most promising entrepreneurs with drive and ideas and invest in them, enabling more efficient and effective business activity. In other words, direct finance is more convenient.
Businesses and ownership belong to shareholders. Shareholders have a strong sense that the company belongs to them. The company’s managers likewise acknowledge and respect the owners. This is my understanding.
By being a shareholder, anyone can enjoy the fruits of the real economy. The fruits can be consumed or reinvested, fueling the next phase of economic growth. This economic logic drives the U.S. economy.
■ What about emerging markets?
Even with growth, it is crucial that the benefits are properly distributed to citizens and investors. Many emerging markets are dominated by a small elite and those close to political leadership. Proper distribution of economic benefits to investors requires sophisticated governance, contractual systems, and citizen maturity. China’s recent explicit interference in private enterprises is a case in point.
■ U.S. companies do not care about unknown investors
Looking at the world’s stock markets, the U.S. market’s outsized capitalization and overall growth stand out.
Going public means anonymous investors of unknown identities can become shareholders. Founders, major shareholders, and financial institutions like banks and brokers—these are all concerns for the company. Yet the United States does not care much about whether investors other than insiders are unknown. If it increases the company’s value, it accepts unknown investors and is relatively unhesitant to sell the company to unfamiliar buyers as well.
■ A country that can become the world’s top in a single generation: the American Dream
Many U.S. giants were built by young founders in a short time. Microsoft, Amazon, Tesla are representative, among many others.
Why does the United States produce so many growth companies, more than any other country? I believe it’s the American Dream—the national ethos that allows anyone, regardless of origin, to realize their dreams in a single generation. This cultural trait heavily influences entrepreneurship and corporate growth.
Europe does not seek such exceptional individuals. In Japan, who among today’s leaders built a top company in a single generation? Son of SoftBank (Masayoshi Son) in the U.S., and other Japanese exemplars like Morikawa and Yanai show success but are outliers. They distance themselves from traditional economic organizations like Keidanren.
Moreover, the leaders of these business groups often come from traditional, well-performing companies, with CEOs who are salaried. This reflects structural country differences rather than mere gaps with the United States.
■ Books that convinced me of the long-term rise of U.S. stocks
Here are some books that influenced my viewpoint. These works are well-known and caused a strong reaction at their time of publication.
All share the idea that American history and culture differ from those of other countries. Each book is written by an educated American or a Japanese sociologist well-versed in Christianity, Western civilization, and the world’s major religions.
To Westerners, the “New World” and Protestantism shaped a self-made country. These conditions, I believe, contributed to the birth and evolution of highly developed stock markets.
To help you understand, I will introduce several books in the future.
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5. Kawata’s Walk
◇◇Recently visited favorite shops◇◇
Lately, I’ve been visiting this meat restaurant. The staff are all friendly and pleasant.
Many dishes feature lean, tender meat, which suits me. When I asked the manager about stock investing, it seems they’re using robo-advisors, though I’m not sure what they buy.
I asked him to check my video, and he watched it carefully. He teased the younger staff, saying, “This guy is a pachinko addict, right?” but that would be a waste. It’s easier to lead a horse to water than to make it drink.
Recently, there have been many 8 PM video meetings (night shifts), so I eat lunch well and keep dinner light. The curry I had the other day was delicious but small in portion. The meat was 100g. So last time I increased the curry roux, and next time I plan to increase the meat to 120g. It’s nice that they accommodate such requests.
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6. Upcoming Activities
◇ November 17 (Wed) 11:00 Stock Voice
◇ November 26 (Fri) 8:15 AM Nikkei CNBC
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7. Q&A Corner
Questions (summary)
I’d like to know about managing surplus funds that won’t be needed for 20 years. Is it risky to hold individually high-priced, steadily rising Nasdaq 100 stocks?
・AAPL
・AMZN
・GOOGL
・ASML
・V
・NVDA
・MSFT
I basically won’t buy or sell. Purchasing the eMAXIS NASDAQ-100 Index means buying both rising and falling stocks, which seems to lower performance. Please advise when you have time. Thank you.
Answer
These stocks have ultimately been very successful. But twenty years ago, it would have been almost impossible to predict their rise accurately. For example,
① Microsoft faced antitrust penalties and remained subdued for a long time under former CEO Steve Ballmer (Jan 2000–Feb 2014).
Microsoft: chart shown on a logarithmic scale
② Alphabet performed well this year, but before that it lagged Nasdaq-100.
③ Visa has trailed Nasdaq-100 in the past few years, though in the last year it has caught up (see last Friday’s morning meeting video “There are no eternal youngsters”).
https://www.youtube.com/watch?v=pB-ymcm-n0k&t=1073s
Visa (orange), Nasdaq-100 (candlesticks), S&P 500 (light blue)
Of course, many stocks have lower performance than Nasdaq-100. If these diverge, they will be removed from the index and only the strong ones will remain. And importantly, unlike Japanese stocks, the ceiling for the winners can rise without limit.
This is the source of Nasdaq-100’s strength. But we cannot know in advance which will be winners. Therefore, I rely on my own limits of foresight and market foresight and bet on Nasdaq-100.
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