Japanese Stock Market from Dec 2018 to May 2019 | What I did during the ups and downs

The market has been a little unstable since 2018, and the ups and downs have been intense.
In recent years, I think many people have been confused by a big fall in stock prices in December 2018.
I was temporarily hit by this fall, but I thought it was a good place to buy and went to buy.

It depends on the investor, but here’s a quick rundown of what I’ve done.
What’s important is to understand a crash and a shock.

Difference between crash and shock

Let’s take a quick look at the stocks you should buy when a crash occurs and the stocks you should not buy when a shock occurs. Understand the crash and crash First, understand the crash and crash of the stock market. These two seem similar and very different. As a matter of fact, a sharp drop in stock prices is common. I think a sudden plunge once a year is possible. The most recent example is the China crash and the crash at the end of 2018.

What is a crash?

The crash shows basically a V-shaped recovery. In other words, it falls quickly, but it has a characteristic that the stock price returns quickly even if it goes down.
As an investor, I’d like to see a rebound in stock prices. In some cases, leverage can be used to rebound.

You can think of a sharp decline as a consolidation of your stock position. In other words, the stock price that went up too much will go down to a reasonable level once it is liquidated.

What is the shock?

A shock occurs about once every 10 years.
The most recent one is the Lehman Shock. One of the characteristics of a crash is that stock prices sometimes run out by the year and it lasts for a long time.
In other words, stock prices tend to stay low for a long time, so you have to endure the winter.

Leveraging at the time of a crash can increase your debt and cause you to go out of the market, so I basically don’t recommend it.

How to distinguish a sharp fall from a sharp fall.

It is important to sense the atmosphere of the market and the economic situation.
When there is a shock, even major companies will collapse.

For example, Lehman Brothers collapsed and Yamaichi Securities also went bankrupt at the time of the past crash.
When relatively large companies continue to fail, there is a high possibility of a shock.

If you look at the current economy, you can see that as of May 2019, there is no situation such a shock.
So at the moment, there are no signs of this, and if it goes down, I will buy on the assumption that it will return. I
don’t think we need to be intimidated by a Lehman shock-sized crash.
In the case of a sharp fall, you buy stocks in the process of returning to the market.

What to buy?

Basically, you should buy mainly stocks whose prices are easy to return.

In some cases, I think it’s a good idea to sell my current stock and transfer money only to stocks that are easy to return.
Speaking of fluctuation, isn’t cyclical good?

Some people think so, but personally, cyclical stocks have a long cycle, so I don’t buy them much.

What Small investors Should do?

If you don’t have enough money, what do you do?

For example, if you only have about 3-5 million yen (30~50K USD) for investment, you don’t have enough money to buy during the crash.

When you start buying, it’s better to do it by someone with a certain amount of money, and when you don’t, it’s not too late to buy it after the fall stops and price starts to rise.

For example, in the case of December 2018, the price fell at a terrifying pace, so it takes courage to go on buying stocks.
Especially for people with small funds, many of them might not be able to buy it because they are afraid that it might run out in the middle.

But I think it was not too late to buy it from January 2019. Especially for those who don’t have much money, it is better to limit the buying of stocks to three stocks at most.

Also, the past charts are helpful, so let’s see roughly where the bottom is.

Whether leverage should be applied or not

In the event of a shock, leverage is basically not acceptable.
Because there is a high possibility that the debt will increase.

On the other hand, You can leverage it when the market crashes, but it depends on the stock.

The stocks you should pay special attention to are those with high daily stock price volatility. These kinds of stocks often cannot accept lower prices.

On the other hand, stocks with low daily volatility don’t have high returns but often have low risks. It is better to compare past charts to determine whether stock prices are likely to return or not.

If you look at a chart for about five years, you can see if the prices are higher or lower than the prices at the time of a sharp fall.
For example, let’s take a look at Softbank’s chart for the past five years.
As of December 2019, the stock price had dropped to around 7000 yen, but it has often been higher than this level compared to the past 5 years.

When a rising stock falls sharply, chances are high.