| Investment 3 |
April 24, 2019
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| In this country, the GDP's growth was stagnant. It was said that the economy was stagnant because of an 'Economic Bubble', and the failure of handling it in its aftermath. That happened a long time ago. But what is a 'bubble', and why after the 'bubble' broke, did the economy become that bad? He guessed about it using an example of land: If many people wanted to buy the same land, the land's price would rise. If Mr. A and Mr. B asked the land owner to sell the land, the owner would want to sell it to the one who offered the highest price. As the population goes up, the economy becomes better. People tend to buy houses. Companies tend to make more factories. The price of land tends to go up. This is a relation of supply and demand. Maybe he had learned about it in high school. But when it comes to investments, it's a different story. People can invest by borrowing money. When land prices going up, some people might think, "Oh, bank interests are rather cheaper than the land's rising prices." Banks lend money with the agreement that if the borrower can't repay the loan, the  bank can get the land. In this case, borrowers can borrow as much money as they want. The more they invest in land, the more the land price goes up. This makes a 'bubble'. If it's a normal deal, it will stop at a certain point because the number of people who want to buy is limited; the price for land that they can afford is limited. But in the case of an investment, land prices can become higher than normal prices because of expectation of investors. But, one day, some people started to shout, "The King is naked!" As the price was not real, prices started to go down. The prices kept going down. The prices went down even under suitable prices. Because buyers thought that they should wait until tomorrow to buy because the prices might continue to go down. In the case of stock markets, the average stock price consisting of 225 leading companies' stocks was about $390 in 1989 and dropped to about $150 in 1992, then later to $76 in 2003. Now it is around $200. If land prices became too cheap, and if a company borrowed money from a bank, the bank could ask the company to return their money because they lent that money thinking that if the company couldn't return the money, the bank could get the land and they could sell it to get the original money. But now, the land was too cheap to cover. So the company might stop their plan to construct new factories, to employ new workers. Construction companies would lose a chance of constructing. New graduates would lose their chance to get a job. Families started to reduce their consuming thinking that their job might be cut. This is called a 'downward spiral', and society goes into a recession. "Anyways..." he thought, "What should I invest in?" He didn't want to invest in land because he didn't think people and companies would need more land to buy. For people, the population was continuously decreasing after the 'Economic Bubble'. Maybe this is irony. For companies, as the population was decreasing, and their average age became higher, they wouldn't eat more, drink more, play more, drive more. So shops and factories wouldn't need more land. How about stocks? He had read an article that mentioned about this nations companies' productivity and their future. It was severe: Venture businesses that were established within the past ten years and have an estimated value of $1 billion or more, and are unlisted, are called 'unicorns'. They can be the next generation's Google, Amazon, Facebook, Apple, etc. There are only 0 'unicorns' in this country. Only one unicorn was in the stock market last year. In contrast, there are 237 unicorns in the world: The best 4 countries: US 118 (50%), China 62(26%), England 13, and India 9. The writer wrote that this country's workers were diligent, patient, and willing to obey their bosses but the type of people who were wanted in the new era were not that type of people, but people like Steve Jobs. He completely agreed with the idea of the writer. He heard that nowadays rather fewer young people went abroad and studied at universities in foreign countries than in the past. He also heard that in this country, the productivity per worker* was rather lower than other developed countries (*GDP/the number of the workers). In other countries, job seekers study other languages in order to make themselves competitive but this country didn't. Because of those issues, he thought about investing mainly in mutual funds that held foreign stocks, like IT companies, medical related companies, and food companies that did business worldwide. But he had a second thought. He believed that there were some companies which were seriously thinking about this country's future and working globally. Their workers were required to know a language like English, have a knowledge of computers, and economics. A game company? A clothing company? A machine company? Even a water purifying company? He wanted to invest in some companies that would be the next era's leading companies. Although they hadn't been yet listed in the stock markets, he could research them. (End) |
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*aftermath :余波
*interest :利子
*downward spiral :急下降
*recession :不況
*establish :設立する
*unlisted :上場していない
*unicorn :一角獣