As a result of buying 100 shares of SB stock every month for 2018 without giving it much thought...
Hello, Shimoyama here.
I will present a stock-related quiz, so please think about it.
There were two investors, Mr. A and Mr. B.
Both were moved by the ideals of Mr. Son, the president of SoftBank Group,
and since last year 2018
decided to buy SoftBank Group stock.
Mr. A, regardless of stock price fluctuations,
from January to December 2018
decided to buy 100 shares each month at that month’s opening price.
On the other hand, Mr. B
at the beginning of 2018
thought, “The decline will continue,”
and
to buy at as low a price as possible,
decided to wait and observe for a while.
And as Mr. B predicted,
SoftBank Group’s stock price
continued to fall for a while.
When June arrived,
Mr. B
thought, “Finally the bottom has come,”
and from July to December
decided to buy 200 shares each month at that month’s opening price.
The following numbers are
for 2018,
the actual opening prices (monthly) of SoftBank Group stock.
January: 9,220
February: 9,028
March: 8,773
April: 7,915
May: 8,451
June: 7,759
July: 7,960
August: 9,390
September: 10,250
October: 11,380
November: 8,648
December: 9,720
Mr. B’s intuition was correct,
and after the decline until June,
from July onward,
there was a sharp rise
and by September to October
the price surpassed 10,000 yen.
It seems Mr. B managed to enter at the right time,
but
here is the question.
At the end of 2018, both Mr. A and Mr. B
held the same 1,200 shares each,
which is more favorable for them by the end of the year?
Please answer with your intuition.
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Is it more advantageous to start buying after prices have fallen?
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What do you think?
Probably,
many would think
“Mr. B has the favorable position.”
to be advantageous.
Starting to buy after prices have fallen seems more advantageous for Mr. B,
doesn’t it?
However,
when you actually calculate the averages
and per-unit costs for each,
the following results appear.
Mr. A: 9,041 yen
Mr. B: 9,558 yen
In other words,
Mr. A is more favorable.
If this surprises you,
please try calculating it yourself.
However, what I want to convey here
is not that
“Mr. A’s strategy is correct.”
It’s not that simple.Depending on market conditions,
Mr. B could have been favored as well.
Through this quiz, I want to convey
that you should not be bound by intuition.
According to Nobel Prize-winning American behavioral economist Daniel Kahneman,
the human brain has
two thinking modes.
One is thinking that gives answers intuitively
(fast thinking).
The other is thinking slowly and carefully to arrive at an answer
(slow thinking).
For example
when you see 5 + 5 =
you reflexively answer
10, right?
This is fast thinking.
On the other hand
when you see 434343 × 434343,
many people will
think carefully and calculate.
This is slow thinking.
Humans instinctively possess these two thinking modes,
and if not conscious,
fast thinking
will quickly give an answer.
Of course,
if the answer is correct, there is no problem, but
fast thinking often gives superficial answers, so be careful.
Even those who answered “Mr. B” in the first quiz
may have been caught by the fast-thinking idea that
“Buying from the bottom is advantageous for Mr. B.”
so please be careful not to be bound by intuition.
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Failures of SoftBank IPO stocks
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By the way, recently
I felt that people are “getting bound by fast thinking,”
when I heard
someone who bought SoftBank’s IPO stock at the end of last year
and suffered a loss tell their story.
That person
had the image that
“IPO = if you buy, you make money.”
and
that intuitive thinking led to the loss.
From my perspective,
it felt as though
“if I had used slow thinking and calmly reflected,
the loss could have been prevented.”
For example, on Twitter there were posts like
“I got selected in the SoftBank stock lottery.”
There were even reports
that the odds were about 1.1x,
and
if you applied, you would almost certainly be selected, which was obvious.
In addition, due to issues such as communication outages,
there were cancellations,
and there were rumors that
brokerages barely managed to sell SoftBank stock.
In such an oversupplied situation, and with the stock considered expensive compared to rivals,
it is hard to imagine the stock rising.
Of course, in the stock market, you never know what will happen, but at least
it is clear that the possibility of rising is very low.
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IPO to look forward to in 2019
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Regarding IPOs, 2019 is expected to continue featuring
well-known companies
as IPOs.
USJ, Universal Studios Japan, operated by “USJ,”
“Daiso” for the 100-yen shop chain,
and previously introduced via a newsletter
autonomous driving technology company “ZMP,”
cloud accounting software “freee,”
provided by “freee,”
a job-search site operator
“BizReach,”
and other well-known companies
are expected to have IPOs.
In addition, in the United States
UBER is finally said to go public.
We cannot take our eyes off IPOs.
However,
if you use IPOs well,
it is certainly easier to profit,
but
as I’ve explained today,
please be careful not to be bound by fast thinking.
IPO is not guaranteed,
please remember that.
Thank you for watching until the end today.
Keizo Shimo
(References:
‘The former financial bureaucrat who made five mistakes and arrived at a new investment mindset (Diamond, Inc.)’)
