| Investment 2 |
April 18, 2019
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| He went to a bookstore and went to the business magazine corner. He was amazed that there were so many magazines featuring investments: 'How To Increase Your Money', 'Stock Investment : 18 Ways To Win', 'Billionaire By Land Investment', 'The Must Rules For No-Lose-Investors', etc. Flipping through the pages of a book named 'Investment for Beginners', he studied something: Stocks are a risky investment, so investors should be careful and invest with responsibility. There are about 3,700 companies listed in the stock markets in this country. Now the commissions of buying and selling stocks are very cheap. Because of this there are many day traders. He was not a type of day trader, but he could imagine how he could lose his money: He could buy the stock of an IT (Information Technology) company at 100. After several months, it could become 150. He would be very happy. He would think that if it became 200, he would sell it, he shouldn't be too greedy. But if the stock became 180, maybe it would start to fall, maybe becoming 170, then 160, 150 ... but he wouldn't be able to sell it, because of the fact that the stock was once 180. The stock could continuously keep falling, 140, 130, 120 ... and at last 100. Of course, he couldn't sell it because if he did, his efforts for a certain amount of months would be for nothing. The price could keep falling 90, 80, 70 ... At this point, maybe two types of  people existed; 1) one who sells because he/she thinks that if they keep it, the stock might become zero. Better to cut losses; 2) one who doesn't sell because they were frozen and couldn't face the truth suitably. He had no idea which type he was. In mutual funds, professionals called 'fund manager', choose some stocks (like 50 companies) or other investments like bonds or land (it is called REAT). From knowledge and long term experience, fund managers choose a set of investment criteria carefully, for example: lower risks (called risk hedge) and/or stable returns, etc. Their customers tend not to be gamblers, they are just workers, housewives, retirement people, etc. who want to invest their savings for their future life. If they lost it, their future would be miserable. But even so, a fund is a fund; it has certain risks, it might have losses, as well. There were other investment opportunities such as bonds. 'Investment for Beginners' read that bonds that were the most low risk investments were issued by governments, governmental banks, and insurance unions. Their base is firm. But he knew that it was wrong. They are not without risk. He had a coworker who had bought an Australia dollar bond that would give 7% interest, and the guy bought the bond at 10,000 US dollars. After 10 years, the due date came and the guy received about $20,000. He was shocked. This country's national bond's interest was 0.1% or so. He also had a relative who had bought Turkey lira bond at $20,000. His relative was supposed to receive about $30,000 after five years, the interest was fixed high. The clerk explained that unless the lira dropped to 60% to the dollar, he wouldn't have a loss. The clerk added that he could receive more than $30,000 if the lira became stronger than the dollar. But it never happened. After his purchase, the lira continuously went down and after five years, at the due time, the lira was 40% of the original. His relative received about $10,000. In the end, he didn't buy any magazines. He felt their recommendations seemed questionable. He could go to a secondhand bookstore and buy a magazine that was issued one year ago and make sure that the magazine predictions were correct or not. He had heard, "If clerks of stock brokerage firms are confident about their recommendations, they would buy the stocks themselves and become billionaires." Maybe publishers are the same. At home, he started to research more. He searched about Warren Buffett, who was a famous investor and was known for choosing stocks very carefully, thinking about each company's business future, and even the executives' abilities. Once he bought a company, he would keep it for a long time. He said in an interview that because of American companies' innovation, improvement of productivity, entrepreneurship, rich capital, their stocks are certain to rise. He said, "When your stock is falling, don't panic, you have to stay with it. Only keeping the stock for the long term will earn money." He wanted to follow this idea. He didn't want to change his feeling every day by stock's going up and down. But on the other hand, he was at that age that he couldn't wait for 30 years. In this rapid proceeding society, companies growing time seemed rapid. Actually, in Amazon's case, it grew 20 times lager in a ten year span. Warren Buffett bought stocks of Coca-Cola in 1988. He had thought that Buffet bought them a long, long time ago. Maybe Buffet was a type of person to pass over a stone bridge only after stopping and checking it out first. (To be continued ...) |
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*criteria :criterionの複数形。標準、基準、尺度
*innovation :革新
*entrepreneurship :起業家精神
*capital :資本金