Some Thoughts on The Stock Market

Keep calm and follow the plan

Well, the stock markets seem to have caught the novel coronavirus. Checked my Rakuten account today after seeing some posts on the forum here, and we’re down… quite a bit.

I figure this might be a good time to do a quick post for anyone who is feeling a bit anxious.

What’s going on?

I don’t know. My impression is that no one does, although there are plenty of articles that try to connect the novel coronavirus, supply chain disruption, etc. to today’s stock price movements.

Stock markets in general seem to be down 3-10% today, and it’s possible that they may recover soon or fall (much) further. This is completely normal.

Remember that price movements, in themselves, don’t make any difference to your situation. You haven’t made a profit until you sell, and you haven’t made a loss until you sell.

If you are planning to continue investing for the long run, great. Cheaper shares will make it more likely for you to make money over the long-term. Continue with your regular purchases. Markets have only fallen to where they were three months ago, so it is probably not worth trying to buy more in hope of a bargain.

If you are tempted to sell or otherwise adjust your portfolio, stop. Think for a moment: what special insight or information do you have that helped you make that decision? If you don’t have any, you may be reacting mindlessly to the news. Being overly stressed right now may be a sign that your portfolio allocation is not correct, or that you do not have a good understanding of investing/why you are investing.

The only people who should be worried are people that might need to sell their investments in the next few months. For them, they may wish to consider selling if doing so now would provide them with enough money but seeing further falls in the near future would hurt them. In general, you should not invest money you need in the next few years in the stock market.

What should I do?

If you have a plan and have been making regular purchases, don’t do anything. Carry on with your plan and continue buying the same things with the same timing. If you are lucky you’ll see big price drops and your regular payments will buy much more.

If you are thinking about getting started with investing this might be a good time to start making small purchases. You might be lucky and get some bargains if the stock market continues to fall.

If you are freaking out and feel like you want to sell everything or completely change your portfolio, take a deep breath and then drop by the forum and write down your thoughts. Other members will be happy to give you feedback and advice.

Otherwise, don’t worry about your investments and practice basic hygiene, make sure you have ample supplies of everything you would need for a couple of weeks self-quarantine at home, and have a nice meal with family or friends.

Anything else?

Schools across Japan are closing from Monday, but many 児童館 after school programs are offering special care for the children of working parents. Demand is likely to be stiff, so if you need help contact your local place quickly.

If you are ill in Japan with a cough, fever, or lethargy, you should seek medical help after four days (or two if you are high risk) by calling your local helpline. Don’t go to work, school, or a hospital.

Hope everyone is doing okay out there.

28 Responses

  1. I recommend that you do not sell but rather every other day or so purchase more. It always comes back, well at least the Dow. The Nikkei never ever got back up to the highest after the bubble broke. 40,000 or so?

    Abe has a special conference on Saturday. People are not happy with him at all. Making decisions without consulting more than 80-year-old bureaucrats is not smart.

    The new Aeon Mall in Zama today, by the way, was crowded. Some great sales out there now.

  2. When the Lehman shock happened in 2008, I was not working and had the bank chasing me as equity in my property has dropped below the required value at which they loaned me money.. I was not able to take advantage of the drop that happened then

    Hopefully the Corona Virus does not lead to major Job losses this time round, but considering supply chains are now at risk, not sure if this will be the case…

    1. Yeah, we ran into the same problem. We have cash reserves that I was planning to use to buy stocks if they went on sale, but my wife’s business (English school) is facing a substantial threat from any extended shutdowns so we will need to keep all that cash just in case 🙁

      I don’t see us being forced to sell investments, so there is at least that.

      2. Sorry to hear that Ben. Is there any way your wife can start teaching remotely via google hangouts etc? I’m sure those kids will be crying out for stimulation especially while the schools are shut.

        1. That’s plan B. We have classes of 8-12 kids though, so it’s going to be very much a substandard option.

          As long as we aren’t shut down for more than two months we’ll probably be okay.

  3. When the Lehman shock happened in 2008, I was not working and had the bank chasing me as equity in my property has dropped below the required value at which they loaned me money.. I was not able to take advantage of the drop that happened then

    Hopefully the Corona Virus does not lead to major Job losses this time round, but considering supply chains are now at risk, not sure if this will be the case…

  4. The mayor here decided local schools would remain open, so I think what Abe said–the sound byte that’s getting headlines–was more a recommendation than an order. Maybe various other boards of education around the country will also decide that classes will continue.

    Also, my wife relays internet/twitter comments to the effect that it was a low cost move–no budget needed, no constituency harmed, it’s school-year end anyway, and tho there are complaints there is likely less effect on parents/biz/economy than some other possible courses of action (=the illusion of action).

    1. International schools in Tokyo doing virtual online classes. Western calendar so not the end of the year.

  5. Update: just did our monthly family net worth spreadsheet, and we’re down about seven million yen from last month. It’s all good. This month’s contributions will go much further 🙂

  6. In a completely selfish way, I am excited about the idea of discounts. I’m in my low-30s, so there is a still a long time before I would start taking any distributions.

    My wife and I have had a big cash reserve, and we didn’t feel comfortable investing it all at once. We were on track to evenly invest monthly over the next 36 months, knowing that we would buy more if there is a big drop in the market. This may be a vague questions, but any thoughts on how to create a strategy on investing more as the market drops? Rather than just dump money in here and there, but to have a clear strategy in place?

    1. Buying regularly on a schedule is a good strategy as we have no idea what will happen going forward. Takes the emotion and second-guessing out of it

  7. How can I set-up a day trading account in Japan.
    Does anyone know of stock charts for the Japan Stock Market –
    which are accessible online.
    I live in Mito Shi, Ibaraki.

    1. We don’t really recommend day-trading here but you can easily do so on any of the major online brokers (Rakuten, SBI, Monex).

      1. Thank you. What are the that you frown on day trading,
        if you could enlighten me,
        it would be much appreciated.

        1. I believe day trading is tax-inefficient, time-consuming, stressful, and has a low chance of success.

          Investing in diversified, low-cost index funds for the long-term is tax-efficient, takes almost no time, is not stressful as you shouldn’t be thinking about it, and has a good chance of success.

          Not as exciting, but I invest to provide for my family, not for fun 🙂

        2. An important question: Why are you thinking about investing?
          — If you already have plenty of savings and money to live on, and have no problem with losing the money, then go ahead and do day trading.
          — However, if you’re trying to build a nest egg for retirement, buy a house or car, or save for college for your child, then Ben’s advice offers you the highest likelihood of success.
          No investing system can guarantee success. That said, as Ben recommends, investing small amounts each month (what Morningstar calls dollar-cost averaging) over many years will give you a portfolio that has a high probability of growing through market highs and lows. If you can automate your investing by setting up automatic withdrawals from your paycheck or bank account on the same day each month, it won’t take any effort to make those investments. And you won’t have to spend much time worrying about how your investments are doing, trying to time your buys and sells, and looking for the next great buy. I had more success investing in mutual funds than in stocks, and it caused infinitely less stress.

          1. Tedley,
            Hi, thank you for your insight and advice.
            May I ask how old you are ?
            May I also inquiry as to what are your 5 favorite
            books on investment/stock market mechanics/stock analysis ?
            I look forward to your reply.
            J3

          2. I like what I read here but disagree on one aspect. You can get a guarantee on some investments called annuities if contracted out of a successful and well known company. I have one and although I could have made more on my money following other routes, I was not money hungry, knew my mortgage would be completed soon, and had no stress at all knowing the income was guaranteed for life, and should I die too soon it was also a life insurance policy. A brilliant friend of mine since junior high school, a very successful banker, recently bought into the same one I have. I totally trust him and his opinions on annuities.

            If you are planning to buy a place in Japan, don’t expect to double your money in the future. Look at it as a place to live your life at or bring younger family in as you get older.

            I own my condo and have the monthly fee of ¥23,000. Not bad in my opinion. All major repairs are done by the organization. I have done my own repairs myself, or have had others come in for example like the Ingrid’s of the toilet, dripping faucets as I do not want to touch anything with possibly leakage and damage below me. Japan is not a place to invest in housing and think you will make a profit.

            Try to get a mind set of 5at you do not have to be rich to be happy, and teach your kids the same. Teach them how to save as I have done and that I have done fine even after a divorce and ten years of child support at ¥200,000 a month.

            Happiness does not come from a bank account. Look at celebrities and sports people to get a clue on that.

            ¥350,000 a month without a mortgage is easily a brilliant way to retire in Japan.

          3. SamuraiSurfingShonan, Hi, Thank you.
            I appreciate your insight and comments. I don’t believe that “one size fits all”
            works for everyone. Have you ever seen the film “Roshomon” -the film is known for a plot device that involves various characters providing subjective, alternative, self-serving, and contradictory versions of the same incident. This describes investing in the stock market.
            Once again thank you, if you could tell me of a website on which I would be able to access stock charts of the stock market; that would really be appreciated.
            Kind Regards,
            J3

          4. Hi J3. I never heard of that movie but will check it out.

            Glad to be of help.

            For stock listings, I would ask the man who runs this site. He is smart, kind and knowledgeable.

          5. Hello again and thank you for your email. The name of the director is Akira Kursawa. He’s great and has the record classic films. Please enjoy. Kind regards,
            J3

          6. Don’t know anything about stock charts unfortunately 🙂

            Just buy the index every month (and the odd dividend stock if I’m feeling impish).

    1. And some other trivia: since you’re a surfer, Big Wednesday’s writer/director (Milius) was a big Kurosawa fan.