People are more afraid of losing money than the speed at which stock prices rise.The rate of decline is very fast.
- Someone thought that stock prices might plummet (Predict)、
- Sell stocks
- Then, the stock price falls.
- Seeing that, others, overcome with fear that the price might fall even further, began to sell in a panic.=People fear loss more than anything else.)
- Then, stock prices plummet = emotions have a ripple effect on the economy.Self-fulfilling prophecy)
Furthermore, it's entirely possible that stock market crashes are being caused by machines, not humans.
By the way,People are more afraid of others losing out.thatProspect TheoryHe said,
The mechanism by which a prediction (that stock prices will fall) actually comes true (that stock prices actually fall).をSelf-fulfilling prophecyThat's what it's called.
These two theories combine,Stock market crash acceleratingThat's what you should do.
However, there are many people who take advantage of the fact that stock prices tend to fall (crash) more sharply than they rise, and make a fortune by doing so.I don't think many people know this fact, so many of you might be surprised!
if,If you know this, you're not a beginner in economics or stocks.Therefore, please see other articles.
Conversely, for those who didn't know,First, I'll introduce some basic stock market knowledge, and then I'll explain the mechanism by which you can profit when stock prices plummet.
The basics of stocks: Buying and selling stocks
For example, youI had bought 100,000 yen worth of Company A's stock.Let's assume that.
Company A: Company profits increase → Earnings per share increase →Your shares have risen to 110,000 yen, so sell them.。 110,000 yen - 100,000 yen = 10,000 yen profit!
In other words,"Selling price - Buying price = Profit"is.
I think the above is what most people imagine when they hear the word "stocks."
However,There is a mechanism that allows people to profit when stock prices fall, and that is how people in the world make money.Can you profit from falling stock prices? What exactly is the mechanism behind this?
What is "short selling," which involves selling and buying stocks?
Buying and selling stocks is probably the most familiar way for most people to trade stocks.
on the other hand,Sell the stock and buy it back.This is another method.
You can't sell stocks you don't own, right?Some of you may have thought that.
However, it is actually possible. The method is simple.You "borrow" shares from someone and then sell them.ThisShort sellingThat's what it's called.
The mechanism of short selling (i.e., selling on margin).
First, let me explain the mechanism of short selling with an example.
If you borrow shares of Company A, whose stock price is 100,000 yen, from a securities company and sell them on the spot, you will get the money in your hands for the time being.You will receive 100,000 yen.Right?
If you buy back Company A's shares when their value drops to 90,000 yen,The cost is 90,000 yenThat's all.
If I return the borrowed shares now,You will have a net profit of 10,000 yen....That's the principle of short selling. This can be illustrated as follows: ↓
In other words, when stock prices soar, the stocksShort sellingAnd when the stock price fallsbuy backThis allows you to generate profits.This is how to make money when stocks crash.
The reason why the yen appreciates when the global economy worsens. If you're also interested in stocks, these two books are recommended."Master Stock Charts in 7 Days: A Book That Makes Understanding Stock Charts Incredibly Easy"The following"View on Amazon"From the linkTry readingYou can also do that. Even just looking at the table of contents is interesting.That's possible.
Most people who are just starting out in the stock market tend to hold onto their investments even when stock prices start to plummet, and end up losing money.Therefore, it is important to thoroughly learn the mechanism from books like the ones mentioned above.
The crash was,Self-fulfilling prophecyBecause it happens very quickly, caution is necessary.
- Stock prices may fall for some reason.
- (Even if it's not actually the case) people tend to assume the economy is going down.
- (Each individual) refrains from buying
- Consumption is falling.
- Sales actually decline
- The economy will worsen (this will actually happen)
The coronavirus hoax also caused toilet paper to run out.Self-fulfilling prophecyThis had an impact. It was an event that proved that people's thoughts (anxieties) can spread rapidly and have the power to change society.
During an economic downturn, you can make even more money by selling the Nikkei Stock Average.
Have you ever heard of the Nikkei Stock Average?
The Nikkei Stock Average is one of the leading stock price indicators in the Japanese stock market. It is also simply called the Nikkei Average or Nikkei 225. It represents the overall stock prices of companies that are representative of Japan, such as Toyota, NTT, and SoftBank.
literally"Nikkei Stock Average = Average of Japanese stock prices (= Japan's economic situation)"It's something like that. To put it simply, the Nikkei Stock Average rises when the Japanese economy is doing well. And the opposite is also true.
Normally, when we talk about buying and selling stocks, we imagine buying or selling shares of individual companies (for example, Toyota, SoftBank, Nintendo).
However, not only individual companies,Nikkei Stock AverageevenShort sellingIt is possible to do so.
In other words,You can make money when the Japanese economy is in decline.
There are three ways to do this:
- Short selling of Nikkei 225 ETFs
- →Simply put, you can short-sell a small, equal amount of each of the 225 companies whose stocks are used in the Nikkei average.
- Short selling of Nikkei 225 futures
- →There are two types: Mini (trading possible from approximately 80,000 yen) and Large (trading possible from approximately 800,000 yen).
- Nikkei 225 optionsPut optionsBuying
- →This particular stock is a buy, but ultimately, this is a scheme that profits from a decline in the Nikkei average.Regarding put optionsHerePlease refer to this.
*The above explanation of put options is a bit technical, so please refer to the following article for further details.If you use put options effectively, it's even possible to multiply your money 75 times in just four days.
I'll omit the details as they get technical, but for example, companies around the world have canceled events and are losing profits, and more recently, with the spread of the coronavirus, Japanese people are not going out as much.The more Japanese companies' sales fall, the more profitable it becomes, and there are many people who are doing just that.
Short selling is a combination of "margin trading" and "futures."There are two ways to do this. Therefore, if you want to learn more about short selling, the following book is recommended.
・margin tradingFor more information, I recommend the following books.From the Amazon websiteTry readingYou can do that, so even just looking at the table of contents and other information will be helpful.
・futuresFor more information, I recommend the following books.From the Amazon websiteTry readingYou can do that, so even just looking at the table of contents and other information will be helpful.
Recession is sweet.
They say that other people's misfortunes are sweet,It's true that there are people who are overjoyed because they've made a fortune from the economic downturn and the stock market crash.
Leaving aside whether this is good or bad for the moment, it's a good idea to be aware of these kinds of economic mechanisms.
So, what do you think of this fact?Please write your opinion and tweet it!
↓You can post to social media using the button below↓
comment