Global stock markets are falling at the same time, what is needed to start investing in stocks - パワフルな米国株の魅力を徹底研究 - Navi+ - GogoJungle | Auto Trading - Market Analysis

Global stock decline at the same time, but what you need to start investing

It’s Warren, God.

(Self-introduction page：Self-introduction)

Japanese newspapers and television are reporting the global simultaneous stock decline in a big way. They capture the drop in stock prices and market capitalization and sprinkle phrases like “the worst in history.”

Well, when stock prices rise this much, even a 1% drop makes the falling amount larger than in the past.

On the other hand, with Japan finally launching the NISA system, there are signs of a gradual shift from savings to investment, and due to recent stock price increases, more people are becoming interested in stock investing and starting investing.

(Reference past article：The British standard for financial education is interesting)

Still, many people have not yet invested in stocks, especially in individual stocks, thinking “What is that?” or “I don’t really get it,” or “Isn’t it gambling or similar?” or “I won’t do it,” and I think that accounts for most people.

However, history proves that the more you hold stocks for a long time, the more likely you are to reap higher investment returns. Especially U.S. stocks.

If you can genuinely understand and be convinced why this will continue in the future, you can confidently open the door to stock investment for yourselves.

In that sense, for those considering stock investment, I’d like to organize and share what to study and what to understand to get started.

① First, know what “stocks” are

Stocks are not like lotteries, pachinko, or casinos. Owning stock means owning a part of a company. Understand this well. (Reference past article：What exactly is a “stock”?)

② What is “capitalism”

We are in an era of capitalism. According to the famous study by Thomas Piketty, over the last 200 years, the return on capital has continued to outpace economic growth.

In other words, those who own capital (capitalists) see returns that grow at a higher rate than those who earn income from work (salaried workers), and through long-term compounding, inequality continues to widen.

By capitalists, we mean people who own sources of profit-generating capital themselves, such as companies, real estate, bonds, or natural resource rights.

In that sense, owning stock means owning a part of a company that generates profits, a step toward becoming a capitalist.

③ So, which companies’ stocks should you buy?

When considering this, it is important to think about what a corporation is and what it does.

A corporation is “where shareholders entrust management to directors who hire employees, create goods or services, sell and provide them to customers, reduce costs to increase profits, and ultimately return the profits to shareholders.”

With this in mind, you can determine what kinds of companies are good.

That is, it comes down to points like the following.

1) Is the management trustworthy enough to be entrusted with running the company? Entrusting management is like entrusting your invested money. A manager who lacks sincerity can find countless ways to misuse shareholders’ funds when you’re not watching, so whether they’re worthy of your trust is a very important point.

2) Do they have the necessary elements to build a solid customer base and excellent products/services? This includes ideas, cost competitiveness, equipment, talent, raw materials, customer base, etc., and the ability to sustain competitive advantage over the long term is crucial.

3) And then, “lower costs, generate profits, and return profits to shareholders.” Here again, trust in the management is essential. Are costs not being wasted? Do they intend to actively return profits to shareholders, or reinvest in meaningful future business opportunities? This depends on the management’s sincerity and legitimate pride.

Thinking about these things naturally leads to interest and confidence in stock investing, and a first step forward.

In particular, if you delve into these points, you’ll likely focus on U.S.-listed firms that maintain stable management and actively return value to shareholders. However, it’s best for you to conduct your own research and experimentation to reach a satisfactory conclusion.

*However, investing is at your own risk, so please don’t forget that. Not investing is also a personal responsibility.