Investment policy and rules.

In order to make a profit in the long term, strategy is very important.

The key for whether a person does well or not depends on their ability to judge.

In order to prevent an error in judgment, I offer suggestions on working out the investment policy and rules.

Based on an embarrassing past experience of failure, I came up with the following investment policy and rules:

A. Decide how much you want to invest in the stock market.

I strongly recommend only using margin money when investing.

When a person is not calm and composed, they can’t aren’t able to make wise choices.

B. Decide on how many brands to invest in.

Especially for novices, concentrated investing is very dangerous.

To prevent risks purchase several stocks and diversify your investment in a variety of industries. For example, diversify in the automobile industry, food industry, medical industry, real estate industry and so on.

However, for me, it is troublesome to own too many stocks. In my case and considering my management capacity, the general rule is to own no more than fifty stocks.

If I increase stocks without limit when it comes to choosing the stock I can’t do it properly. More than anything I can’t have a great attachment to the stocks.

C. Decide to each one brand, invest the maximum amount of money.

No matter how excellent company may seem, do not assume it is absolutely safe.

In my case I decide an upper limit to invest in one stock at 5% of the investment amount.

D. Purchase the same stock several times

After deciding a C reference stock price chart, purchase the stock by limit order little by little.

E. Buy high dividend yield stocks

In my case first of all I choose the stocks which dividends yield more than 4％.

In such case like that, the stock price goes up, and dividends still remain, dividend yield must fall. When dividend yield becomes less than 2.5％, that is the time to change to a different stock.

After accumulating experience, improve the plan again and again, or reexamine the preexisting plan and policy.

Why do stock prices fluctuate?

Shares sometimes plunge and many investors become deeply disappointed.

But from a different point of view it is a rare opportunity for a wise investor to get many stocks very cheaply.

Because looking back on the history, it will return to the original stock price in the end.

Reasons that stock prices go down	Remarks
Corporate earnings fall	The important point here is the cause of earnings falling and grasping the future outlook for corporate earnings. If it is a temporary phenomenon, it is no problem and there is no need to rush.
Dividend falls Dividend is canceled	In many cases performance deterioration and dividend falls will go together.
Ex dividend	In many cases the stock price falls more than the receive dividend price right after ex rights of receive dividend.
Yen appreciation	Many Japanese companies export their products. Yen appreciation would lead to higher prices in dollar terms. Damaging the competitiveness of Japanese exports.
High interest rates	When interest rates are high, more people choose to put their money in savings accounts to get a steady return and avoid the risks of stock investment. High interest rates cause companies to borrow less and invest less in facilities which weakens earnings.
Foreign investors selling	Foreign institutional investors manage large amounts of capital and tend to trade stocks aggressively. The overwhelming majority of foreign investors are interested in not only earnings dividend income but also capital gains.
Scandals	It is difficult to judge. Guess the impact to the performance. collect information as much as possible and imagine how much and how long the effect will be.
Natural disasters	Earthquakes or typhoons can affect production for companies with factories in affected areas, thereby depressing earnings. But at the same time, such events increase awareness about natural disasters and tend to boost spending on disaster prevention by governments, corporations, and households.
Economic cycles	Looking back on history, it must return to the original stock price. It's good to buy more or hold it.
International affairs	Many Japanese manufactures must import raw materials like gold, copper, iron ore and oil. When countries producing these raw materials experience political instability, Japanese companies have more difficultly importing the resources needed to manufacture their products.
Unstable political situations	When a political situation is unstable, the government might suddenly change its economic policy or perhaps abandon necessary policies and that causes damage to the economy.