What is a long-term investment type stock investment that even an amateur can win?

Even if you want to invest in stocks, you often worry about how to get involved in stock investment.

One example is the long-term and short-term issues of whether to be involved in the long term or the short term, and the issue of stock selection as to what kind of stock is involved in stock investment.

Especially for long-term and short-term issues, the stocks and investment methods to be selected will change depending on this policy, so it is necessary to decide first.

Therefore, this time, I would like to look at the characteristics of long-term stock investment, focusing on these contents .

  • Differences between long-term and short-term equity investments
  • Why long-term investment is recommended for equity investment
  • Tips for Successful Long-Term Equity Investment

If you read through to the end, you will find out the good and bad of long-term investment, the characteristics of stocks to choose for long-term investment, and how to effectively make long-term stock investment .

Table of contents 

  • 1 What is the difference between long-term investment and short-term investment?
  • 2 Recommended is non-short-term operation
    • 2.1 Excellent compatibility with office workers
    • 2.2 You can win depending on the stock analysis
    • 2.3 Matching with the current Japanese economy
  • 3 Precautions and tips for operation
    • 3.1 Do not use margin trading
    • 3.2 Change the stop- loss line sequentially
  • 4 Conditions for stocks to be held for long-term operation
    • 4.1 High safety and growth potential
    • 4.2 High dividend rate
    • 4.3 Stock price is not overpriced
  • 5 Two books you want to read
    • 5.1 A new stock book that the Japanese didn’t know for some reason
    • 5.2 The future of equity investment
  • 6 Ideal is to get the help of an investment adviser
  1. What is the difference between long-term investment and short-term investment?

In fact, it is not well known what is the difference between long-term trading and short-term trading in stock investment.

Therefore, here I have listed the differences between stock investment that assumes long-term trading and stock investment that assumes short-term trading .

As listed here, there are several differences between long-term trading equity investments and short-term trading equity investments.

The difference between long-term stock investment and short-term stock investment that you should especially check is the holding period of the stock .

This holding period is usually 3 days or less for short-term equity investments, and 2 weeks or less at the longest.

On the other hand, in the case of long-term stock investment, you will hold the same stock for at least 3 weeks, and in the long case, you will hold the same stock for half a year or more than a year.

Considering the difference between long-term and short-term holding periods, you can see that long-term equity investment and short-term equity investment are completely different things.

As a result , the initial funding and the frequency of market checks required will change between long-term and short-term equity investments .

So far, I think you have somehow understood the difference between short-term equity investment and long-term equity investment.

Therefore, from now on, we will consider whether to choose long-term or short-term stock investment when working on stock investment, keeping in mind the contents so far.

  1. Recommended is non-short-term operation

There are advantages and disadvantages to both short-term stock investment and long-term stock investment, but the manager’s recommendation is long-term stock investment.

The reason why we recommend long-term stock investment is that long-term stock investment has these merits .

  1. Excellent compatibility with office workers
  2. Even amateurs can win if they study
  3. Excellent compatibility with the current Japanese economy

The details of the three benefits of long-term equity investment discussed here will be introduced in order from the top.

  • Excellent compatibility with office workers

The first reason that managers recommend long-term stock investment is that it goes well with office workers.

The reason why this long-term trade is extremely compatible with office workers is that, as the name implies, long-term trades hold stocks for a long period of time.

In other words, in the case of long-term trading, once you purchase a stock, you can leave the stock you own, so you do not need to check the market price every day or hour .

This should be convenient for office workers who are busy with meetings and chores every day and it is virtually impossible to check the market price.

In fact, from the experience of the manager who is an active office worker investor, long-term investment can be involved in stock investment within the range that does not burden the main business .

With this in mind, if you are investing in stocks while continuing your core business, it is safe to adopt long-term trading.

  • You can win depending on the stock analysis

The second reason managers recommend long-term equity investments over short-term equity investments is the issue of winning percentage.

In fact, short-term stock investment has a lot of gambling elements, so it is difficult to win stably.

And in the first place, it’s physically impossible for non-professional stock traders to always look at the charts to win short-term trades.

On the other hand, in the case of long-term stock investment, if you buy a stock that is cheap and expected to grow in the future, you will win with a high probability .

It goes without saying which one is more difficult.

Moreover, there are various books on how to search for cheap stocks, and if you work on searching for cheap stocks by referring to the contents written in those books, even beginners of stock investment can find enough.

  • Consistent with the current Japanese economy

I said that long-term trading is superior to short-term trading in terms of compatibility with office workers and winning percentage, but that is not all.

In fact, long-term equity investment is a perfect match for the current Japanese economy. To understand this, let’s consider the latest Nikkei Stock Average.

In fact, looking at the Nikkei average for the period from February 2016 to the present, the overall trend is rising.

Moreover, the Nikkei average is expected to continue rising at least until 2020, when the Tokyo Olympics will be held.

In other words, for the last few years, if you hold Japanese stocks for a long time, you will benefit from the booming economy and you can expect profits with high probability .

Considering the current trends in addition to compatibility with office workers and pure difficulty, it is a reasonable choice to aim for long-term equity investment.

  1. Precautions and tips for operation

So far, we have introduced the merits of long-term equity investment, but I think we have not touched on the points to note when working on long-term investment.

Therefore, from here , I have summarized two points that I would like to pay particular attention to when engaging in long-term trading .

  1. Do not use margin trading
  2. Change the stop-loss line sequentially

Here are the details of the two points we’ve covered when working on long-term equity investments, one at a time.

  • Do not use margin trading

That’s right, it’s better not to use this margin trading. In fact, the use of margin trading is extremely dangerous for long-term investment in stocks.

Because margin trading is a type of leverage, in other words, it is actually a loan . In fact, when using margin trading for stock investment, you can buy and sell stocks up to 3.3 times the account funds with the funds in the securities account as collateral.

This is nice at first glance, but what if the invested company goes bankrupt?

Of course, you will lose more than your original amount, and you will take over the amount. This is a huge inconvenience for equity investors looking to make long-term investments.

As long-term investment holds the stock of a specific company for a long period of time, the risk of bankruptcy of the investee is naturally greater than that of short-term investment .

I don’t want to think too much about it, but a company that invested on the premise of long-term investment goes bankrupt, stocks run out of paper, and only debt remains …

Such a worst situation can occur when using margin trading for long-term investment.

Since long-term investment has a higher risk of bankruptcy of the investee than short-term investment, it is the royal road of long-term trading to work on stock investment without using margin trading in case of emergency.

  • Change the stop-loss line sequentially

The key to tackling the second long-term investment is to gradually raise the loss cut line.

This “raising the loss cut line” means raising the sell limit price as the value of the stock increases .

For example, suppose you purchase a bargain stock of 1,000 yen per share with a stop-loss price of -70 yen, which is 930 yen.

In this case, suppose that the unit price of the brand goes up to 1,100 yen after purchase. In this case, the loss cut line is not placed on the initial line of 930 yen, but is raised to 1030 yen, which is the current price of 1,100 yen minus 70 yen.

If you do this, even if the stocks you hold for a long time unintentionally crash, you can sell at the specified sell limit of 1,030 yen, so you will be profitable.

This story is a little overkill, but raising the selling line as the present value of a stock rises is an essential technique for long-term investments .

  1. Conditions for stocks to be held for long-term operation

What do you think are the essential points for success in long-term equity investment?

I think there will be various answers to this, but one item that cannot be excluded is to find a brand that is expected to rise.

These are the characteristics of stocks that are expected to rise and are suitable for long-term investment .

  1. High safety and growth potential
  2. High dividend rate
  3. Stock price is not overpriced

Stocks that meet these three conditions are ideal for long-term stock investment.

Let’s look at the details of the three conditions commonly found in stocks that are perfect for long-term equity investments, starting from the top.

  • High safety and growth potential

“Highly safe and growing” stocks in this heading are stocks issued by companies that have a low risk of collapse and are expected to grow in the future.

Here are three things to keep in mind in order to find such an ideal brand .

  1. High capital adequacy ratio
  2. Sales and operating income for the last 5 years
  3. Market trends surrounding the company

Let’s look at each one.

  • Ideal for capital to exceed 40%

The first capital adequacy ratio is an indicator of how much capital a company has.

The calculation method of the numerical value is the calculation formula of total capital ÷ (total capital-others’ capital), and this calculation will be calculated naturally.

Companies with a capital adequacy ratio of more than 40% that can be calculated using this formula are unlikely to collapse, so I would like to pay attention when looking for stocks for long-term stock investment.

  • Sales and operating income are rising

Stocks of highly secure companies are suitable for long-term trading, but there are many companies that are stable but have low growth rates.

The stock prices of these companies do not rise easily, so if you want to make a profit by investing in stocks, it is not recommended.

Therefore, as an individual manager, we recommend that you also check the growth potential of the company you have noticed after checking the capital adequacy ratio .

One of the criteria for this growth is whether sales and operating income have been rising over the past five years.

A company whose sales and operating income have been growing for five consecutive years has excellent management teams, so future growth can be expected .

  • Checking the external environment

I mentioned earlier that when selecting a stock for long-term investment, it is essential to confirm the safety and growth potential of the company through financial statements, but financial data alone is not enough.

This is because equity investment is about investing in the future of a company, and financial data is a track record so far . In short, financial data is just past performance.

Considering this point, it is indispensable to properly check not only the financial data but also the trends of the industry surrounding the company, and investigate whether the company that has noticed it will perform well even one year later.

In particular, we recommend that you always pay attention to the risks of the emergence of a new economy that will undermine the business model of the company you are paying attention to .

One example is the relationship between Google’s autonomous driving technology and Toyota’s existing automobile industry, the relationship between the development of blockchain technology and the bank’s payment system.

It is important to keep an eye on the emergence of new technologies and business models that may fundamentally disrupt these existing business models.

  • High dividend rate

I mentioned earlier that the safety and growth potential of stocks are indispensable for long-term stock investment, but in fact, the high dividend payout cannot be overlooked .

In the first place, what is this high dividend payability is an index showing how much dividend the company pays to investors.

For example, which is the higher dividend per share, the stock of a company that pays a dividend of 20 yen per share twice a year or the stock of a company that pays a dividend of 15 yen per share?

Of course, it’s the former.

Dividends and dividend rates tend to be underestimated in equity investments compared to trading profits, but in long-term investments dividends are as important as trading profits, or worse than trading profits. Become.

Therefore, if you are interested in medium-term or long-term stock investment, we recommend that you check the annual dividend amount and dividend rate before investing.

By the way, one guideline for high-dividend stocks that you should keep track of in long-term stock investment is whether or not the annual dividend yield exceeds 2.5% .

Since these stocks with an annual dividend yield of over 2.5% are high-dividend stocks, I would like to pay attention to this number when embarking on long-term stock investment. By the way, an example of a corporate stock whose dividend yield exceeds 2.5% is taken up on this page.

  • Stock price is not overpriced

No matter how good a brand is, if you buy it when it is obviously expensive, you will definitely get a high price.

In particular, stocks with high security, high growth rate, and high dividend rate are popular, so they tend to be expensive.

Considering this point, even if you find the “best stock candidate”, it is essential to confirm whether the stock is at the “buy” timing or not.

If you mistakenly engage in long-term equity investment, you will almost certainly lose money in the medium to long term.

For that reason, we recommend that you check these indicators to see if the stock you are looking at is cheap or expensive .

  • Whether the PER is above 1.5
  • Whether PER is lower or higher than competitors
  • Compare the base price with the current stock price

Of particular note here is the PER (Price Earnings Ratio), which indicates the degree of bargaining of a stock .

In the world of equity investment, stocks with a PER below 15 are desirable, and stocks above 15 tend to be overvalued by investors.

By the way, the PER of each company stock is published on each stock investment related site such as Yahoo Finance, so even if you do not know the calculation method, you can know the PER value of each company stock.

  1. Two books you want to read

So far, we have summarized the characteristics and merits of long-term stock investment.

I don’t think there will be any bad results if you work on long-term stock investment based on the information introduced this time, but if possible, we recommend that you read these two books together .

  • A new stock book that the Japanese didn’t know for some reason
  • The future of equity investment

Both books are good books packed with the know-how that is indispensable for long-term stock investment.

I will briefly introduce the outlines of the two books mentioned here and the points that can be learned by reading each book.

  • A new stock book that the Japanese didn’t know for some reason

This is a summary of how to find the appropriate stock price for stocks currently traded in the stock market.

By reading this book, you can learn how to calculate the appropriate stock price of each company, which is indispensable when searching for cheap stocks .

By the way, the manager himself became able to calculate the appropriate stock price after reading this “book of new stocks that the Japanese did not know for some reason”, and it was almost impossible to grab expensive stocks.

As a result, the winning percentage of stock investment has increased dramatically, so I am truly glad to read it.

Aside from the manager’s story, it is well worth reading because the content of “a new stock book that the Japanese did not know for some reason” is very useful in long-term stock investment where finding a cheap stock determines the outcome. ..

  • The future of equity investment

The future of equity investment, which I would like to introduce next, is a book that summarizes the laws of the stock market that prominent American economists have determined while studying the stock market over the past 50 years .

Read this book to learn about stock selection mistakes that stock investors tend to make and the failure patterns that many investors tend to make in the stock market.

In fact, this book, “The Future of Equity Investment,” is also one of the bibles for managers to engage in medium- to long-term equity investment.

Thanks to this book, the manager himself has dramatically increased the winning percentage of stock investment, so if you are interested in long-term stock investment, I definitely recommend it.

By the way, this site has a page that summarizes the contents of this book “The Future of Stock Investment”.

  • The ideal is to get the help of an investment adviser

Once again, the key to long-term equity investment is to find and buy stocks that are expected to rise in the long run . If you can do this, you will almost certainly win a long-term equity investment.

However, it is not easy to find “safe”, “high growth”, “high dividend” and “cheap” stocks that are suitable for this long-term equity investment.

In such a case, it is useful to make a contract with an investment advisor who regularly introduces stocks for long-term investment .

If you make a contract with them, stock information suitable for long-term stock investment will be distributed at any time, so if you purchase the stock and keep holding it for a certain period of time, you can expect positive results naturally.

By the way, the representative of the advisor who advises on this long-term stock investment is the stock investment adviser.

Equity investment advisers make a living by advising long-term equity investments, and using them will increase the winning percentage of long-term equity investments by at least 1.5 times .

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