The Art of Missing The Big Bull Trend (Nikkei/Japan Example)
Crisis or crash will happen from time to time.
However, the funny thing is, human psychology is so fixated in "Avoiding the Pain" versus "Taking the Opportunities" when it is presented.
Why people like Warren Buffett are the richest people in the world? Despite not using any form of technical analysis? Because fundamentals matters and capital flow matters.
Yes, depression happens, crash happens, but market recovers soon after, and then stride to make newer high and new all time high.
That is because market and capital follows the development in economy and as the world population grows, as emerging countries grow to become developed country, the total world GDP is increasing from time to time, so, it is natural for the global stock market to rise over LONG PERIOD OF TIME.
Doesn't mean that people should buy at the market peak or market top. It just means the chances for market crash or market corrections are very low. Once every 10-20 years and the potential upside is always much much bigger than the downside.
Market crash or depression means that stocks are cheap and provide a better entry point for people who can think long term enough. Such as those people who bought in 2009, 2002 Nasdaq, 1997 Asian stocks, 1987 crash, 1974 crash or 1932 great depression bottom.
But, to stay in cash and wait patiently for this type of crash to happen can be painful.
For example, people often talks about Japan 1988 bubble and how it was devastating for the Japan and all the ensuing lost decades. People didn't mention that Japan stock market or Nikkei increases 1000x from 1948 to 1988 in a 40 year bull market without any major corrections.
Just think about it, Japan stock market did 1000x in 40 years and never had any major corrections. Eventually the trend will be over and that is the reasons why Japan is having a lost decades. Because the longer and the more you stretch, the longer it takes to recover.
However, try to imagine this, from 1948 to 1980, if anyone get into the stock market, despite the lost decades, they are still UP. Because Nikkei never went below the 7000 level despite the crash and despite the 2008-2009 crisis.
Just think about it, after 32 years of bull market, anyone who didn't invest in Japan stock market before 1980 will miss the gain forever. They will never be able to buy at that cheap level.
Look at any stock market in the world, Dow Jones, and go 40 years back, do you have the chance to buy at that level again anymore? Maybe never forever.
"But, everything will crash and collapse. It doesn't matter."
Doomsday scenario means that we have OTHER THINGS to worry other than stock market. If the global economy crash and we entered into a global great depression that is the biggest ever in human history, then, gun and pistol rules the world, it doesn't matter if Dow is at 100,000 or 10,000 or 1,000 or 100.
it doesn't matter, what happens to stock doesn't matter anymore because you might get killed first before your stocks got liquidated on margin.
The point is, when they are too much fear, market doesn't go down or crash. Fear means everyone has sold out, no more sellers. When they are no more sellers, hard for something to go down and crash.
I am not advocating to buy at market peak and market top. But looking at this example and other example, there is always a probability and chances that stock market will keep going up and break new all time high and go to a level that nobody thinks about. And even when the stock market crash, it may crash to level where most people don't even have the chances to buy.
Look at nikkei example, look at dow and s&p 500 example.
Plus, we are on the brink of Fourth Industrial Revolution 4.0, which includes many things and blockchain.
The easiest and best bet for long term is to long everything that will benefit from IR4.0. Doesn't mean everything will go up. Some dinosours will die and will be replaced. Some will be value traps.
Even in Japan, they were and are some 10-100 baggers in the stock market, despite the lost decades.
Opportunities always exist. And the easiest way to get super rich is to have long term mindset and ride the trend as far as possible.
Reference:
stooq.com/q/g/?s=^nkx
However, the funny thing is, human psychology is so fixated in "Avoiding the Pain" versus "Taking the Opportunities" when it is presented.
Why people like Warren Buffett are the richest people in the world? Despite not using any form of technical analysis? Because fundamentals matters and capital flow matters.
Yes, depression happens, crash happens, but market recovers soon after, and then stride to make newer high and new all time high.
That is because market and capital follows the development in economy and as the world population grows, as emerging countries grow to become developed country, the total world GDP is increasing from time to time, so, it is natural for the global stock market to rise over LONG PERIOD OF TIME.
Doesn't mean that people should buy at the market peak or market top. It just means the chances for market crash or market corrections are very low. Once every 10-20 years and the potential upside is always much much bigger than the downside.
Market crash or depression means that stocks are cheap and provide a better entry point for people who can think long term enough. Such as those people who bought in 2009, 2002 Nasdaq, 1997 Asian stocks, 1987 crash, 1974 crash or 1932 great depression bottom.
But, to stay in cash and wait patiently for this type of crash to happen can be painful.
For example, people often talks about Japan 1988 bubble and how it was devastating for the Japan and all the ensuing lost decades. People didn't mention that Japan stock market or Nikkei increases 1000x from 1948 to 1988 in a 40 year bull market without any major corrections.
Just think about it, Japan stock market did 1000x in 40 years and never had any major corrections. Eventually the trend will be over and that is the reasons why Japan is having a lost decades. Because the longer and the more you stretch, the longer it takes to recover.
However, try to imagine this, from 1948 to 1980, if anyone get into the stock market, despite the lost decades, they are still UP. Because Nikkei never went below the 7000 level despite the crash and despite the 2008-2009 crisis.
Just think about it, after 32 years of bull market, anyone who didn't invest in Japan stock market before 1980 will miss the gain forever. They will never be able to buy at that cheap level.
Look at any stock market in the world, Dow Jones, and go 40 years back, do you have the chance to buy at that level again anymore? Maybe never forever.
"But, everything will crash and collapse. It doesn't matter."
Doomsday scenario means that we have OTHER THINGS to worry other than stock market. If the global economy crash and we entered into a global great depression that is the biggest ever in human history, then, gun and pistol rules the world, it doesn't matter if Dow is at 100,000 or 10,000 or 1,000 or 100.
it doesn't matter, what happens to stock doesn't matter anymore because you might get killed first before your stocks got liquidated on margin.
The point is, when they are too much fear, market doesn't go down or crash. Fear means everyone has sold out, no more sellers. When they are no more sellers, hard for something to go down and crash.
I am not advocating to buy at market peak and market top. But looking at this example and other example, there is always a probability and chances that stock market will keep going up and break new all time high and go to a level that nobody thinks about. And even when the stock market crash, it may crash to level where most people don't even have the chances to buy.
Look at nikkei example, look at dow and s&p 500 example.
Plus, we are on the brink of Fourth Industrial Revolution 4.0, which includes many things and blockchain.
The easiest and best bet for long term is to long everything that will benefit from IR4.0. Doesn't mean everything will go up. Some dinosours will die and will be replaced. Some will be value traps.
Even in Japan, they were and are some 10-100 baggers in the stock market, despite the lost decades.
Opportunities always exist. And the easiest way to get super rich is to have long term mindset and ride the trend as far as possible.
Reference:
stooq.com/q/g/?s=^nkx
Penafian
Maklumat dan penerbitan adalah tidak dimaksudkan untuk menjadi, dan tidak membentuk, nasihat untuk kewangan, pelaburan, perdagangan dan jenis-jenis lain atau cadangan yang dibekalkan atau disahkan oleh TradingView. Baca dengan lebih lanjut di Terma Penggunaan.