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🇹🇼 Taiwan /Economy & Trade

Japanese Investor Urges Market Participants to Prepare for No Profit, Prioritize Liquidity

From Liberty Times · () Chinese

Translated from Chinese, summarized and contextualized by DistantNews.

At a glance

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  • A Japanese stock market expert with 1 billion yen in assets advises investors to prepare for not making money and maintain liquidity for future opportunities.
  • The expert highlights that excessive leverage and short-term profit expectations lead to financial ruin, while new NISA investors may err by stopping investments due to minor losses.
  • Holding cash is presented not just as a defensive asset but as crucial capital to seize opportunities during market downturns or when new sectors gain traction.

In Japan's volatile stock market, a seasoned investor with approximately 1 billion yen (about $6.3 million USD) advises a shift in mindset: prepare for periods of no profit and prioritize liquidity.

The investor, known as "Kabu-oku Taro," emphasizes that long-term survival in the market hinges not on chasing quick gains but on maintaining financial flexibility. This approach counters the common pitfalls of investors who either over-leverage and face margin calls during downturns or, like some new NISA participants, exit investments prematurely due to minor paper losses.

"The most frightening thing in investing is not temporary asset shrinkage," the expert stated, "but using living expenses to cover margin calls due to excessive leverage, ultimately losing the ability to participate in the next market rally." Prolonged stress from such situations can also impair rational decision-making.

The most frightening thing in investing is not temporary asset shrinkage, but using living expenses to cover margin calls due to excessive leverage, ultimately losing the ability to participate in the next market rally.

— Japanese stock market expertExplaining the dangers of over-leveraging and short-term profit seeking.

For new NISA investors, halting monthly contributions after a few months of losses is a mistake, the expert argues. The core of long-term investment isn't avoiding downturns but accumulating assets over time. During market dips, consistent monthly investments allow for purchasing more shares with the same amount of money.

"Cash is not just a defensive asset; it is capital waiting for the next opportunity," the expert stressed. Having readily available funds enables swift entry into the market when it suddenly drops or when emerging sectors like resources, energy, or food gain investor interest. Ultimately, the ability to stay in the market by preserving capital and composure is the most vital, yet often overlooked, skill in long-term investing.

Cash is not just a defensive asset; it is capital waiting for the next opportunity.

— Japanese stock market expertHighlighting the strategic importance of holding cash in investment portfolios.
DistantNews Editorial

Originally published by Liberty Times in Chinese. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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