[Summary]
The IT bubble was a period in which stock prices became overheated due to Internet expectations.
When using IT bubbles with real-life examples, it becomes easier to see the difference between situations where they can be used and situations where they are difficult to use.
In actual investment, the starting point is to separate the dream of new technology from profit. However, it is important to be careful that it is easy to misunderstand that you can buy anything with a growth theme.
In this article, we will organize IT bubbles not as "knowledge" but as steps to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
First thing to distinguish about IT bubbles
When looking at the IT bubble, first determine what you want to judge. The information you need changes depending on whether you want to know the meaning, confirm before buying or selling, or review your current holdings.
Especially for beginners in investing, the easier the words are, the more they tend to take them as a conclusion. The IT bubble is not the only factor in making decisions. If you want to check it, it is more realistic to look at it in conjunction with fund management, holding period, and opposing materials.
Consider the IT bubble as an example
If we look at the IT bubble as an example, we first need to make a narrow premise. It is important not to mix up whether you are talking about the market as a whole, individual stocks, NISA or long-term funds.
If you check the following points, things will be much more organized.
| Axis to check | Things to see in the IT bubble |
|---|---|
| purpose | What do you use to judge? |
| Time axis | Which is closer to short-term trading, long-term holding, or NISA? |
| basis | Which one is more important: price, business performance, interest rates, exchange rates, or psychology? |
| risk | When things go the other way, where should you look again? |
| action | Will it lead to buying, selling, or doing nothing? |
Points that can easily cause trouble in making decisions
It's not only when you lack knowledge that you stumble in the IT bubble. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Focusing on one scene where the IT bubble works well
- Even if the price movements are similar, if the background is different, they are treated as different things.
- View not only successes but also failures using the same criteria.
- Check if you can reproduce it with your own amount of funds
The important thing here is not to settle on one correct answer based solely on the IT bubble. In investment, the meaning of the same material changes depending on the market, holding period, and amount of funds. When in doubt, prioritize confirmation over conclusion.
Checklist before buying and selling
Before using the IT bubble as a basis for making an actual decision, check at least these five things.
- Can you explain in one sentence the purpose of watching the IT bubble?
- Have you confirmed one or more countermeasures or failure conditions?
- Are you investing your living funds or money that will be used soon?
- Have you decided in advance the criteria for cutting losses, taking profits, and continuing to hold stocks?
- Are you making judgments based only on social media or short headlines?
Checklists are simple, but they prevent you from adding reasons after making a decision. The purpose of checking IT bubbles is not to act faster, but to reduce unnecessary errors in judgment.
Summary
The IT bubble is a material for organizing investment decisions. Even if you read it as an example, your judgment will be inaccurate if you treat it as a standalone buy/sell signal.
The points to keep in mind are as follows.
- Decide first the purpose of looking at the IT bubble
- Do not mix time axis and amount of funds
- Check not only good materials but also negative materials
- When using NISA and long-term funds, consider how to handle losses
- When in doubt, reduce your position or postpone it.
The more knowledge you have, the safer it seems, but in the market it can become dangerous if you use it incorrectly. It is realistic to treat the IT bubble as a tool to pause before buying or selling, rather than as a word to rush into judgment.