Truth about investing in U.S. stocks conveyed by Shigenobu Kawada's "U.S. Stock Investment Course Trained by the Media" [Vol.28] distributed December 27, 2021
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The Truth About U.S. Stock Investing
Shigenobu Kawada's "Train Your U.S. Stocks in the Media"
【Vol.28】 Distributed December 27, 2021
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*** Table of Contents ***
Market Recap
This Week's Straight Talk!
This Week's Featured Articles
【Japanese People Do Not Buy Japanese Stocks: The New Capitalism "Becoming Poor"】【With Rising Interest Rates, Next Year’s Stock Market Is Not Expected to Deliver Large Returns】【Top 1000 Global Market Capitalizations: The U.S. Surpasses 50% for the First Time; Japan Below 5%】
Investment Tips
Kawada's Walk
Activity Information
Q&A Corner
Achieving 20 Million Yen Milestone
Source: Financial Services Agency; ExeTrust Co., Ltd. created based on asset management simulations
※The figures above are for simulation purposes only and do not guarantee future investment results. Fees and taxes are not considered.
How to Read: Assumed Returns and Target Year
3–4% for 30+ years: Wrap funds or balanced funds fit here
5–7% even then takes about 25 years if investing outside the U.S.
8–10% would take about 20 years: a modest projection for the S&P 500’s rise
Performance of the S&P 500 (dividends reinvested 1970-2021)
Aim to reach 20,000,000 yen through proper risk-taking as early as possible
Kawada's message is very simple. To reach 20 million yen, have as much of your surplus capital work efficiently for you. For that, participants must correctly understand risk and reward. Before reading this weekly newsletter, take a look at this table to confirm the correct investment posture.
Now, start the countdown to achieving 20,000,000 yen right away!
Online Salon "Wealth-Building Salon Where Dreams Come True"
This online salon is designed to help you succeed in asset formation by learning together and encouraging each other. It provides member-only seminars where you can experience the allure of U.S. stock investing and content beyond what the popular newsletter "Training Your U.S. Stocks in the Media" conveys.
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1. Market Recap (Dec 20–Dec 23)
Major Indices
- Dow Jones +1.7%
- S&P 500 +2.3%
- Nasdaq Composite +3.2%
— Quick Version —
After starting with a continued weak tone in the latter part of the prior week, hopes were boosted as concerns over the Omicron variant eased and the bond market stabilized thanks to solid economic data, leading to a sharp rebound and the S&P 500 hitting fresh all-time highs by the close.
— A bit more detail —
On Monday, concerns about the economic outlook rose due to Democratic senators' opposition to Biden's spending plan; however, reports of falling Omicron cases in South Africa and expectations that Omicron may be less severe reduced fears. Strong consumer confidence in November and robust GDP growth (revised) for Q3 helped support the market, and the bond market remained calm despite inflation concerns. Earnings from companies like Nike were solid, contributing to a sense of security, and the market rebounded on Tuesday and continued rising, with the S&P 500 reaching new highs on Thursday (markets were closed on Friday).
S&P 500 Chart 1 year
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2. This Week's Straight Talk!
A column presenting essential information you should know.
Note: to be continued
In a high-price range consolidation, it eventually reached an all-time high
The trend has reversed from the previous week. It seems that concerns over the Omicron variant have caused ups and downs, but the reason is superficial; the real picture is shifts in portfolios and cashing-out by some hedge funds, followed by a buying back after that. If you look at a somewhat longer December chart, it’s just a consolidation in a high-price area, and the strong market conditions drove it to an all-time high.
Nevertheless, solid economic indicators and bond market movements are notable fundamentals. December’s Conference Board consumer confidence index was at a five-month high, and November existing-home sales were at a high not seen since January this year. GDP growth for Q3–Q3 was revised upward to exceed market expectations. The PCE core deflator, the Fed’s preferred measure of personal income price, rose 0.5% from the previous month, also above market expectations. Even with such solid economic data, inflation fears did not rise in the bond market, and long-term yields remained steady.
From here, the tightening direction shown at December’s FOMC meeting should already be priced in by the bond market. The strong demand at the recent 20-year Treasury auction also contributed to market calm. If there is to be any change in the bond market's outlook, it would likely come from the January 7 employment report for December.
A movement at the year's start is worth watching
This week, markets outside the U.S. are on Christmas break or year-end holidays, but the U.S. stock market remains open. Still, many market participants take holidays until the New Year, and markets tend to be quiet.
Trading resumes on January 3, but in the U.S., if the first three days of the year are positive, that year is considered to be favorable. Whether true or not, U.S. institutional investors start the year with full operation, so asset allocation trends of long-term funds such as pensions are important. Next year, with the Fed widely expected to tighten, a key question is whether growth tech stocks that saw year-end profit-taking will be bought again, or whether value stocks, as often discussed, will attract more funds. There is also a possibility that funds will flow to stock markets outside the U.S., which are considered cheaper and lagging, so that is another point to watch.
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3. This Week’s Pick-up Articles
A section where I select information useful for asset formation from what I’ve gathered and rank it, with my very private opinions.
[1] Nikkei: Japanese People Do Not Buy Japanese Stocks—New Capitalism “Will Get Poor” 12/19
Even the Kishida administration’s “new capitalism” has distrust. “If financial income taxation is strengthened, the wealthy and entrepreneurs will just move abroad.”
From January to November 2021, inflows into the top-ranked AllianceBernstein US Growth Stock fund totaled 1.2375 trillion yen, and overall overseas equity funds saw about 7.3 trillion yen in inflows. Meanwhile, Japanese equity funds disappeared from demand, with outflows of a little over 40 billion yen.
Since the high-growth era, three groups have changed as buyers of Japanese stocks. 1) Until the bubble era, held by financial institutions and corporate cross-holdings. 2) After the bubble burst, overseas investors absorbed the cross-holdings. When the Abe-Nomics cycle turned and overseas players started selling, 3) the government—BOJ and GPIF—provided support.
There is no sign that overseas buyers will actively start buying Japanese stocks. In such a situation, continued selling by individuals could further leave Japanese stocks behind the world.
[Kawada’s Comment]
Recently, like in the Nikkei, there are more “bad Japanese stocks” articles that mock the economy. But Japanese stocks failing to meet investors’ expectations is not new.
Unlike U.S. equities, few Japanese individuals hold Japanese stocks. Therefore the impact of stock-price weakness on the economy is relatively limited compared with the U.S., but this is also why there is less discipline and governance in the stock market. By the way, in Japan, not many companies raise funds via M&A or capital increases when stock prices are weak. So executives are not too worried about stock prices staying weak.
On the other hand, when stock prices rise in Japan, asset inequality tends to become a problem. Considering that many people do not own stocks, politicians may prefer stock prices not to rise. There are many reasons why it might be better for Japan if stocks don’t rise.
[2] Barron’s Digest Rising interest rates mean next year’s stock market may not yield big returns Weekly December 19, 2021
Macro Economy
2022: Supply chain pressures, labor shortages, persistent inflation. With rapid spread of Omicron, travel and leisure spending may be restrained. With more people vaccinated, society should be sustained. U.S. GDP growth for 2022 is expected to slow to 3.3% from this year’s forecast above 5%.
Inflation Path
Inflation is expected to stay high in the first half of 2022, then ease as supply-chain issues resolve.
Inflation: around 3% is the consensus.
Fed
FOMC members’ median projections call for three 0.25% rate hikes in 2022, and three more in 2023.
Earnings Growth
S&P 500 earnings growth expected at about 9% on average by Wall Street in 2022.
Valuation
S&P 500 trailing P/E may fall from about 21x to 18x by end-2022, roughly in line with the five-year average and within the top 20% of the last 30 years.
Bonds
10-year U.S. Treasury yield peaked around 1.75% in March 2021, fell below 1.25% in summer, recently around 1.41%. Bond strategists expect the 10-year yield to rise to about 2% next year.
Stocks
Next year’s gains are expected to be more modest; if December 16 close at 4,668 is the end-year target, a target of 5,100 implies about a 9% rise.
[Kawada’s Comment]
For a while, articles predicting 2022 market trends have increased. But readers should be cautious.
1) Economic growth forecasts often stay within expected ranges.
2) Long-term interest rates tend to end the year lower than initially expected in recent years.
3) Companies’ earnings per share forecasts tend to underperform expectations in Wall Street’s conventions.
4) Historically, end-year stock-price forecasts by strategists are usually lower than actuals; current forecasts imply about 9% upside by year-end next year.
By the way, correlations with the last decade are strong with the pre-2010 period. Considering geopolitical risks and midterm-election turbulence, the specter of 2018’s 6% decline also lingers. Strategists rarely forecast high stock prices confidently, and few think they will decline too much.
[3] Nikkei Worldwide top 1000 by market cap: U.S. exceeds 50% for the first time; Japan under 5%
12/26 issue
The U.S. is clearly leading in global equities. The top-1000 by market cap total surpassed 50% for the first time since the 2008 financial crisis. The U.S. also accounted for about 40% of the number of companies. Japanese firms’ share of market cap fell below 5%, indicating waning presence.
China’s market-cap share is 12%, down from a record 15% last year. European market-cap share is 18%; in 2008 it was 30%, and has continued to decline.
Japan accounts for 68 of the 1,000 companies.
[Kawada’s Comment]
In 2008, U.S. firms accounted for the majority of the top-1000 by market cap at around the mid-30s percentage; recently it has risen to 53%.
Whether U.S. firms’ leadership will intensify further or other regions’ firms will rebound remains to be seen. I don’t think the U.S. share will stop growing. If we anticipate acceleration of digital transformation, U.S. firms will likely gain further advantage.
Often, stock markets are said to be only in the U.S., but global stock markets are moving in that direction.
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4. Investment Hints
A section that writes not only about investment methods and stock picks, but also about notable indicators, statements, and social or political movements.
“Asset Formation: Long-Term Investment is the Best – A Real-World Record in the U.S.”
Recently, I received an email from a viewer. After that, we exchanged several messages. This person, “Nori-pii,” is a native Japanese who lived in the U.S. for many years and just recently returned to Japan.
The gist of the email was that his 30+ years in the U.S. and asset formation experiences there align closely with what I discuss in my “Morning Meetings” videos.
Later, I met Nori-pii directly, and found many common views on the U.S. and investing, so I asked him to share his insights with members of my online salon “Dreams Come True Asset Formation School,” and he spoke there in two sessions.
In this newsletter, I’ll share parts of Nori-pii’s presentation that may be helpful to you. I hope it aids your asset formation.
“Nori-pii” from the U.S. to Return
Nori-pii started living in the U.S. around 1990 when he took a post at a major company’s U.S. office, later returning to Japan and then moving back to Seattle after changing jobs. He spent over 30 years in the U.S., serving as a local manager for a Japanese company.
His professional skills include management as well as accounting, taxation, finance, and English. His hobby is golf; in Seattle, he and his spouse played golf every weekend. After returning to Japan and moving to Asahikawa in Hokkaido, he immediately became a member of a prestigious golf club.
He also loves visiting historic sites, believing Japan offers more to explore due to its long history and tradition compared with the younger U.S. He actively travels domestically.
In short, Nori-pii is a multi-talented person excelling in both work and leisure. He quickly recognized the merits of the U.S. system for asset formation and leveraged it to achieve significant success in asset formation.
Here are parts from my exchanges with Nori-pii that may be useful to you.
Encounter with U.S. stocks
My awakening to U.S. stocks occurred around 1996 when a Seattle financial advisor explained retirement savings. As you know, most U.S. retirement savings are managed through a defined-contribution plan called 401(k).In my case, I invested through Capital Group’s American Funds. After reviewing various funds’ past performance, I was amazed to see they grew at a much higher rate than Japanese stocks. I chose four funds and invested monthly, all in U.S. growth and value stock funds.
Matching (employer contribution to U.S. retirement savings)
Many employers match the amount an individual contributes (matching), and they often do so at the time of monthly payroll. However, many companies cap the match at 3% or 6% of salary.
There are annual limits: the total amount contributed by you and your employer cannot exceed $64,500 in a year, and no tax is charged on this amount until withdrawal.
From 1996 to 2019, over 24 years, contributed funds grew about 4.3 times. This amount should be far larger than many private-sector retirement funds for Japanese white-collar workers. In the U.S., a typical salaryman would accumulate in retirement funds at least this much; in top-tier firms, it could be two or three times more.
Starting U.S. stock investments separately from a 401(k)
From around 1996, I started recording daily in an Excel sheet: date, weather, temperature, and the Dow closing price (later added Nasdaq), then the total value of holdings and retirement fund value to the right. On days with large fluctuations, I noted the main reasons.
In the far right, I kept a simple diary: I wrote about trips to the barber or meetings with people. I still do this, and I check the stock price movement every night before sleeping.
Whenever the Dow or Nasdaq hit new highs, I highlighted in yellow to make it stand out. This practice helped me understand the economic conditions under which stock prices rose or fell, and by following this flow I could anticipate future stock movements to some extent.
In early 2011, I held eight representative stocks, each about $20,000. Among them were some big gainers including GAFAM stocks.
Post-financial crisis, becoming more proactive
From around April 2009, stock prices began an upward trend, so I wanted to increase holdings. I considered borrowing funds from my bank, Bank of America. My mortgage loan on the house had already been paid off, so I had zero debt. So I started equity loans by putting my house as collateral to borrow more funds.
I was still a novice in U.S. stock investing
Because I didn’t know which stocks to buy, I bought only the 30 Dow stocks I knew well and the GAFAM stocks. New tech stocks can surge 7–8% in a day but can also crash by a similar amount, so I focused on familiar companies.
If a company’s earnings were stable, the risk of sudden bankruptcy was lower. I reviewed buys roughly every three months, not as a day trader but as a quarterly trader.
I replaced holdings about twice a year among the Dow 30. I used Yahoo Finance to check U.S. stocks, and looked at analysts’ ratings: Buy, Hold, Sell; I selected those with a Buy rating and a projected 10–20% price increase over the next year, then traded about 8–13 stocks based on personal preference.
Here is a book I’d like to recommend. Reading this book prompted me to actively invest in U.S. stocks. It was after the Lehman crisis, during a period when stock prices were rising. I bought it at Kinokuniya in Seattle. The title is “Introduction to Long-Term Investment in U.S. Stocks” (Diamondo Publishing, author Tomo Nakamura, published June 17, 2010), with the subtitle “Dow Jones will rise to 40,000 in 2022.” Indeed, the Dow has shown strong momentum as predicted. U.S. stocks are truly powerful.
About foreign exchange
Since returning home, I have not yet received U.S. pensions. I’m considering when to convert to Japanese yen, but I think it’s better to wait a bit longer. Assuming USD/JPY settles around 125–130, yen-denominated assets would increase by another about 13%. If you consider Japan’s national strength, there is little reason for yen to strengthen.
For an ordinary wage earner, having experienced life in the U.S. and encountering U.S. stocks was truly lucky. The information in “Kawata Shigenobu’s Thank-You, America Stocks” has been very helpful. I have bought many of the recommended companies’ stocks. I am deeply grateful to Mr. Kawata.
Many Japanese people are stuck in thought and view stock trading as dangerous. It feels like they are choosing poverty. If you convert yen to dollars and buy U.S. stocks, you can still grow your wealth. Not only could stock prices rise, but converting back to yen years later would further increase wealth due to yen depreciation.
Information gathering
I read Nikkei every day very thoroughly. Not the front page; many hints are hidden in smaller articles elsewhere. The economist I often consult is Ryushi Takeuchi. His statements and analysis are highly persuasive. I have used his comments as references for stock trends and exchange trends.
Lessons from U.S. stock investing
What I feel through life in the U.S. is that the U.S. economy is incredibly resilient. The government’s huge debt problem is not unique to the U.S.; it exists in many countries. Finally, here are lessons from my U.S. stock investing experiences.
1) Stocks rise and fall, and there is no clear reason for either; economists’ explanations are always after the fact.
2) “Stock markets exist only in the U.S.” So investing in Japan, Europe, or emerging markets has little meaning. The U.S. holds power due to entirely new industries that can transform society’s lifestyle.
3) The stock crash during Lehman was merely a normal adjustment in hindsight.
4) Without large declines, there are no big gains. When prices fall, buying more is a positive. Even after a crash, prices rebound and often reach new highs, so there is no need to fear.
5) Will U.S. stocks rise forever? The answer is yes. They will have fluctuations, but will continue to rise over the long term.
The reason is that the U.S. truly embodies capitalism. Capitalism, then, is human desire—the desire to grow, to earn profits, to increase wealth in a free and fair market. If stock prices stop rising and fall, that would be when humans abandon desire, which would mean the U.S. has vanished from the earth.
6) Considering future inflation, keeping all funds in bank deposits with zero interest is risky; U.S. stock investments are clearly safer and more advantageous.
7) For index funds like ETFs, you cannot beat them with individual stock picking. Stock picking is a game for self-satisfaction. When you don’t know what to buy, just buy two or three index funds and leave them for several years.
That’s all; I’ve had a truly valuable and beneficial opportunity. Thank you, Nori-pii.
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New Series “All About Asset Formation Using U.S. Stocks”
Introduction
This time, I’ll begin a serialized series covering the essential basics of asset formation. The overall structure is planned as follows.
What era are we living in? Two parts
Independent Japanese people and asset formation essential for independence — Three parts
Is the stock market only in the U.S.? Four parts
Differences between Japanese and U.S. stock culture — Two parts
Features of the U.S. market you should know — Part 1
What is the S&P 500
Why is the U.S. strong
Recommended investment strategies – Core and Satellite Investing –
Core investment strategy
Satellite investment strategy
What should you buy
Sources of information and investing
Episode 5: Features of the U.S. Market You Should Know
Characteristics of the U.S. stock market
For me, the stock market exists only in the United States. Therefore there are no other options. This time, I’ll illustrate some features of the U.S. stock market with charts.
1) Does the stock market exist only in the U.S.?
The global stock market capitalization is currently about 1.2 quadrillion yen (roughly 1200 trillion yen). As you can see, the U.S. accounts for about 61% of the world in the chart below, but Nikkei’s numbers show around 44% with 5000 trillion yen. The difference in share is likely due to how float and other counts are made.
In any case, it’s reasonable to think U.S. stocks account for about half the world, with China and Japan following in second and third.
Surprisingly, the major European stock markets’ market caps are around 400 trillion yen and not very large.
World stock market capitalization
2) U.S. vs. Emerging Markets vs. Developed Markets vs. Japan
A comparison chart from 1990 when the Cold War ended. Emerging markets peaked in 2007 and remain at roughly the same level. Excluding the U.S., developed markets’ fluctuations track the U.S. market, but their gains are much more modest. Japan’s performance is notably weak.
3) Long-term ascent of the S&P 500 (calibrated scale)
The ultra-long-term S&P 500 shows stock prices shooting toward the sky on a non-log scale from 1950 to present. Last week’s December 23 closing was a fresh all-time high of 4725.
4) Long-term ascent of the S&P 500 (log scale)
Even with a logarithmic scale, the S&P 500 appears to rise gradually and steadily on the rightward slope.
5) Annual price change rate of U.S. equities (past 50 years, including dividends)
On a total-return basis, the S&P 500 declines about once every five years if you account for dividends.
6) S&P 500 annual price change rate (past 65 years, ex-dividends)
The S&P 500’s index began in its current form on March 4, 1957. From 1957 to 2021 (a change of about +25%), the index has declined 18 times. Excluding dividends, there are 14 declines.
7) Classification of fluctuations
Over the long term, the S&P 500 rises about 10% per year. It only lands in the narrow 0–10% change range in 12 of 65 years. Other change rates show more variance. In the last 65 years (including 2021):
20% or more rise: 17 times (including 2021)
10–20% rise: 18 times
0–10% rise: 12 times
Negative: 18 times
8) S&P 500 annual return bar chart (since 1928)
9) Recent large declines
In the past 20 years there have been two instances where stock prices halved. But looking back over 100 years, excluding the Great Depression, U.S. stock declines have been at most about half. Prices then typically recover and reach new highs.
10) S&P 500 declines since 2009. In the last 12 years, declines of over 20% occurred three times (2011, 2018, 2021)
S&P 500 Snapshot: Down 1.9% From Last Friday - dshort Post Recommendation - Advisor Perspectives
11) S&P 500 returns over 10-year periods (1940–2020)
Even a 10-year horizon shows variability. The 2010s (2001–2010) experienced two major declines, making performance quite weak.
12) Long-term holding performance of the S&P 500 (1970–2020, 51 years)
The results below are calculated from 1970 onward. Invest in the S&P 500 at the start of 1970 and hold for five years, then sell; continue holding from 1971 to 1975 end, then sell. This method is shown by the red line. Similarly, 10-year holds are blue, and 15-year holds are green.
Holding five-year periods from 1970 can be calculated 47 times. Similarly, 10-year holds 42 times, and so on.
The best five-year performance was about +28.56% per year; the worst was −2.35% per year.
Takeaway
Holding for more than 15 years yields positive investment returns.
Consistent long-term buying yields returns of over 10% including dividends.
13 S&P 500 daily value synthesis since 1928
The general trajectory is upward, though there are early-year dips, mid-year rises, and a summer plateau followed by another fall in autumn and a rally through year-end. This pattern has characterized U.S. stock behavior this year as well. While explanations abound for why this happens, a definitive causal link is hard to pin down.
14) S&P 500 monthly changes (1928–2020 Oct)
Together with the above chart, it clarifies the annual movement. Markets tend to strengthen toward year-end, but the three months leading into September are also relatively strong.
Since 1928, September returns for the S&P 500 have averaged a negative 1.0%. The next weakest months are February and May, each around negative 0.1%.
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◇◇Recent favorite stores (Cinema, Museums) ◇◇
I saw someone in Nikkei newspaper recently and bought it. It’s a classic that’s occasionally featured in media.
What I have is the 14th revised edition issued June 2020, but the author published the preface to “Civilization as Ecology” in Chuubun in 1957. It’s more than 60 years old, yet still frequently referenced.
This book deals with the Old World (Eurasia) only and does not include the New World, the Americas, or Australia. Therefore, it does not include analyses of the United States.
After finishing the book and searching the Internet for related information, I found a report titled “The Security Environment of 21st Century Japan and the Path to Follow—Now Recalling the Ecology of Tarō Umezawa.” It’s good to read this before or after the book; it explains the key points of the book.
Overview of Umezawa’s ecology of civilization
Dividing the world into “East” and “West” is insufficient; the Old World (Eurasia) should be categorized into “First Region” and “Second Region.”
“First Region” refers to Japan and Western Europe, which experienced feudal systems and have highly developed capitalist civilizations.
“Second Region” covers most of the Eurasian continent between the “First Region,” primarily comprising countries that gained independence after World War II, and are characterized by not having feudal systems and by having immature capitalism.
Umezawa proposed the Ecology of Civilization based on ecological theory of succession—the development law of a community’s way of life.
In the “First Region,” transitions were autogenic (self-generating) due to internal community forces, while in the “Second Region” transitions were allogenic (externally driven) by external forces.
Thus, the “First Region” developed smoothly with favorable climates, moderate rainfall, and high productive capacity, whereas the “Second Region” faced harsher conditions—the arid lands were a devil’s nest and history of destruction and conquest hindered transitions.
Additionally, because the “First Region” was not exposed to violence from the “Second Region,” society could flourish like a greenhouse, protected from destruction.
With these discussions in mind, Umezawa asserted, “Japan is not Asia; it is something else, and this conclusion comes from the accumulation of Asia experiences.” He also referenced Fukuzawa Yukichi’s “Departure from Asia to Europe and America” and pointed out that “Japan does not need to depart from Asia because it has been different from Asia from the start.”
Masaru Matsuoka 1628 Nights: ‘Action and Delusion’ — Osamu Umezawa by Masaru Matsuoka’s Thousand Nights and Thousand Books
This book is a great work. It’s a compelling, intuitive classic. Anyone who hasn’t read it should read it at least once.
By smoothly pushing forward a bold reorientation of East–West civilizations, the book incorprates a perspective that has long been neglected: “Viewing Japan from a civilization perspective” without relying on the conventional civilization theories (history or cultural anthropology).
[Kawada’s Comment]
Most civilization-history works tend to be based on Western (British or European, and often U.S.) scholars with Christian roots, which risks Western superiority bias.
Umezawa’s approach, free from religious or Western-centric historical biases, resonates with Japanese readers.
European reception of this book is not clear; however, it’s not easy for Japanese civilization theory to become world mainstream.
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6. Future Activities
◇January 5, 2022 (Wed) 11:00 – Stock Voices
◇January 19, 2022 (Wed) 11:00 – Stock Voices
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7. Q&A Corner
A live newsletter Q&A was held on December 25 (Sat) from 3:00 to 4:20 PM. Below are viewer questions and comments. I answered these questions in the video.
Comments and Questions
①As a guide to the essence and education of U.S. market information, the newsletter is always helpful.
②I bought and read “Why Japan Will Collapse” (Mori Shiro Michio) that was introduced in the morning meeting. It was indeed very interesting. Thanks for the recommendation.
③Using a wealth management app, my assets increased fourfold in seven years. Thanks to you, Kawata. I plan to continue buying U.S. stocks VTI, IVV (S&P 500), QQQ.
④ Is it too late to buy Tesla?
→Tesla’s market cap is already 100 trillion yen. Apple is 300 trillion yen. Is buying Tesla aiming for a tenfold increase realistic? It seems more practical to look for other stock surges with greater potential.
Tesla price since listing (log scale)
⑤For long-term asset formation, if asked to choose one, which would you pick besides other countries’ stocks, bonds, commodities, real estate?
→ U.S. individual stocks. I disclose holdings in my morning meetings.
⑥ Mentioned in the newsletter, Umezawa is known for “The Art of Intellectual Production” and is a famous YouTuber “Ryo Gakuin” in this field. It wasn’t explained, but you can understand Kawata’s thinking by following him on Twitter.
⑦Please forecast the 2022 economy of the U.S. and Japan.
→ In the video, they say U.S. GDP growth might be around 6%, but consensus seems to be about 3.3%.
⑧Please recommend your top 3 books for Naoki Komuro.
→ First, “Constitutional Theory for Japanese,” and then “Biographies of Naoki Komuro, Vol. 1–2.”
⑨
⑩Next year, some say that high-tech will wobble due to rate hikes, so would you advise buying energy or travel-related stocks? What do you think, Kawata?
→ I avoid buying them.
⑪Mr. Kawata! Thank you for everything. Is MSCI still a hold?
→ Yes. I think it remains a “youthful” stock with further growth potential.
MSCI chart five years (log)
⑫Looking toward next year, what should be the cash and S&P 500 fund ratio? Next year is said to be a buying opportunity, but besides regular contributions, I’m thinking of setting aside funds for spot purchases as well.
⑬I own VOO and QQQ. What ratio do you use?
→ Mostly QQQ.
⑭I think Kawata’s theory will double assets in ten years.
⑮Will Nasdaq face a tougher year next year?
⑮U.S. GDP is expected to surpass China by 2030 and India by 2037, but do you think the advantages of U.S. stocks will remain?
⑰Mr. Kawata, have you read Hideyuki Kobayashi? If you have, please recommend some books.
⑱When a lump sum matures and you allocate evenly to S&P 500 and NASDAQ, how many installments would you divide it into? Or can you buy it all at once if not in a short term? Age 60.
⑲Thank you today. I will continue studying U.S. stocks in Kawata’s salon. It’s a good salon where I can learn long-term growth with a calm, unpressurized atmosphere.
⑳> In long-term investing, what portion of cash do you maintain as a constant share of the total? Not as a ratio, but as a fixed amount?
㉑What do you think about the recent leveraged Nasdaq craze?
→ I also own leveraged ETFs.
㉒BullA method to curb the urge to sell when you want to take profits but also want to avoid overtrading
→ It depends on the individual’s will.
㉓I look forward to your weekly newsletter. The book recommendations are helpful. The length is just right. It would be fine if there were more, as long as Kawata isn’t overdoing it.
㉔As of now, have Kawata’s individual holdings beaten QQQ?
→ Yes. Here is my portfolio. I buy a little of each individual stock and a bit of leveraged ETFs. If you look at the year-end changes, it’s clear.
There are some stocks I started buying mid-year, but for the most part I’ve held since the start of the year.
Holding stock's year-to-date relative chart
㉕Regarding Kawata’s individual stocks, please share reasons for buying in the newsletter.
→ Starting next year, I’ll begin sharing individual stock picks.
㉖ Please bring this series back. I listened while drinking.
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