[Summary]
The market was born amid pessimism, and the view is that pessimism remains in the early stages of a bull market.
The market is born in a pessimistic environment and is more prone to failure than the lack of knowledge itself, but the fact that they later justify their hasty decisions.
In actual investing, when the news is bad, we start by looking at supply and demand and the bottoming out of business results separately. However, we cannot overlook the fact that we cannot conclude that the market has bottomed out, just by remaining pessimistic.
In this article, I will explain that the market is born in pessimism, not as "knowledge" but as a procedure to check before buying or selling. Don't rush to conclusions, read according to your financial amount and time horizon.
The market is born in pessimism and must be divided first.
When considering whether the market is pessimistic, first decide what you want to judge. The information you need will change 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. Even though the market is pessimistic, that alone is not the basis for 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.
The market is born in a pessimistic environment and is prone to failure.
If you want to see the market as a pattern of failure, where the market is pessimistic, first of all, 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.
Checking the following points will make things a lot easier.
| Axis to check | The market is born in a pessimistic environment. |
|---|---|
| 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
The market is born in a pessimistic environment, and it's not only when you lack knowledge that you stumble. In fact, there are situations where we interpret something conveniently because we know a little bit about it.
- Don't decide whether to buy or sell the moment you see the market being born in pessimism.
- The market is pessimistic, so don't mix the time axis that suits your birth with your own holding period.
- Don't increase your position to recoup your losses
- Don't make a decision just based on SNS or rankings.
The important thing here is not to settle on a single correct answer just because the market was born in a pessimistic environment. 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 fact that you were born in a pessimistic market as a basis for making an actual decision, check at least these five things.
- Can you explain in one sentence the purpose of seeing the market born in a pessimistic environment?
- 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 confirming that the market is born in pessimism is not to act faster, but to reduce unnecessary judgment errors.
Summary
The market was born amidst pessimism, which is a material for organizing investment decisions. Even if you read it as a failure pattern, treating it as a standalone buy/sell signal will lead to poor judgment.
The points to keep in mind are as follows.
- The market is born in pessimism, and the purpose is determined first.
- 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. The fact that the market is pessimistic should not be used as a word to rush into judgment, but should be treated as a tool to pause before buying or selling.