Huge losses! WealthNavi continues with negative figures and stock price plummets. Consider the future investment policy.
When the market crashes, opening WealthNavi feels like a chore... Sigh, but I’ll check it.
Despite being scared, I checked WealthNavi, took a screenshot for the blog, and closed it right away, because watching losses for too long is not good for mental health.
WealthNavi Performance (As of December 25, 2018)
First, here are WealthNavi’s performance results as of December 25, 2018.
For a principal of 1,055,000 yen,a loss of 117,000 yen! (Return ▼11.1%)
On December 2, 2018, it was barely positive at +1.41%, but afterward it continued to fall. US stocks (VTI) dropped sharply.
In the 1.5 years since starting WealthNavi, this is the first time unrealized losses have grown this large.
From market news, it seems the bear market could continue across the year, so there’s a decent chance unrealized losses will keep widening.
Timing the market is impossible
People say, “WealthNavi is a long-term, dollar-cost averaging investment, so don’t worry,” but honestly, it is disheartening.
At the start of November’s US stock plunge, I added 200,000 yen to WealthNavi, thinking, “Is this a chance!?”So, as a timing investment, it’s a complete failure—that’s the conclusion. Reflecting on it.
The lesson from this time is“It is impossible to invest at the right time in a volatile market.”This is a fact I can’t dispute from experience. The realization that timing investments isn’t for me is also a learning expense.
Even robo-advisors cannot predict such sharp drops.
Market Situation
The Nikkei has fallen by about 1,000 points, and the Dow Jones is plunging as well.
A pessimistic market seems to persist for a whileThat appears to be the market view. Whether the Fed will stop rate hikes or not... It’s hard for a non-financial person like me to understand what Chair Powell will decide. It’s completely unclear to me.
Stock Chart
Market News
The Nikkei average dropped more than 1,000 points from the previous week’s close. Currently trading in the mid-19,100s. Bloomberg reported that President Trump is considering dismissing Treasury Secretary Mnuchin. With uncertainty over US political developments, risk-off selling continues. In the market“From the beginning of the year, until speeches by regional Fed presidents later, the view that rate hikes will stop broadens, and the market will stay tough.”(Domestic Securities)
There were voices like this as well.The Nikkei is at the psychologically important 19,000 level. The outlook depends on future US stocks, but for now the market is likely to continue to find a floor. A sufficiently pessimistic sentiment has spread in the market. A drop to the 18,000s could be rapid, but because it’s year-end and market participants are limited, buying activity may resume only after the new year.
Excerpts from SBI Securities Market Information
WealthNavi CEO Shibayama’s Email
When the market sharply fell, WealthNavi CEO Shibayama sent an email. Even when the market is bad, stay calm and continue “long-term, dollar-cost averaging, and diversification.”
Hello. I am WealthNavi’s CEO, Shibayama.
Globally, stock prices are falling. This week, the Dow Jones and the Nikkei both hit their yearly lows.
For those who manage assets with WealthNavi using “long-term, dollar-cost averaging, and diversification,” especially those who just started investing, you may feel anxious as prices keep falling.
Looking at the market since October this year, there have been moments of rebound, but the downward trend continues.
Concerns about prolonged US-China trade war and Chinese economic slowdownand other risks that could affect the world economy exist. It is said that overseas hedge funds, wary of these risks, sold stocks before the Christmas holidays.
During weeks like this, some people may find it difficult to continue investing. It’s natural to feel anxious when there is a bearish news environment.
So, what should you do in such a situation?
With a “long-term, dollar-cost averaging, and diversification” approach, by spreading investments across global assets, you can aim for returns that surpass global economic growth over the medium to long term.
On the other hand, in a global stock market decline, asset values can fall. It is precisely because of taking such risks that you can aim to beat the world economy’s growth rate. Risk and return are two sides of the same coin.
Therefore, I recommend continuing asset management calmly, without overreacting when markets are up or down.
WealthNavi will continue to strive to support everyone’s “long-term, dollar-cost averaging, and diversification” investments.
Please have a nice weekend.
WealthNavi CEO Kazuhisa Shibayama
Well, of course the WealthNavi side would say that. Indeed, looking at the long term, these drops might be a buying opportunity.
Consider Lessons and Future Policy
I will not cut my losses, I will not stop my 10,000 yen monthly investment, and I will continue with a long-term perspective. The reason is that, in the long term, I expect the US stock market (VTI) to drive global economic growth.
(Source: World Economy Notebook – Dow Jones Industrial Average trends: http://ecodb.net/stock/dow.html)
However,one option is to cancel now and look for another investment destinationif the decline continues. It could also be sensible to cut losses and convert to Japanese yen. Also, WealthNavi’s cancellation fee is free.
I recall Warren Buffett opposed diversification, but a non-financial person should absolutely diversify. If you invest only in the stock market, you won’t have room to maneuver in such cases.
I want this reaffirmation of the importance of diversification to become a lesson learned.
