Introduction
In recent years, stock markets around the world have faced various "crises," such as geopolitical tensions and disruptions to supply chains. The situation in the Middle East, trade wars, pandemics—each time, stock prices temporarily decline, but then recover. However, are these risks truly reflected in stock prices?
This article explains the "market realities" pointed out by investment experts and economic commentators, and offers practical advice on how to approach the uncertainties you face.
The crisis is already factored in, but can we really say we are "safe"?
In recent years, the idea that "markets price in risk" has become ingrained in financial markets. However, this principle has several limitations.
first,Psychological factors of market participantsThis is important. While investors may be acting in a way that appears rational, emotions and cognitive biases can sometimes influence their actions. For example,"A risk-off (risk-avoidance) mindset"As this strengthens, investors begin to perceive the US capital markets as safer than those of other major countries. This may seem like a contradictory attitude, but in reality"The United States remains the most liquid market."This reflects that fact.
moreover,Political statements by President Trump, Mr. Bessent, and othersThis also has a significant impact on the market. Just as past presidents have viewed stock prices as a key indicator of success, their policies directly influence market reactions.
According to economic commentator Tojirian Det, an attitude of "attaching to bond yields" is also important. This can be inferred from the context of "peace rising," but in realityDe-escalation of geopolitical tensions is a positive factor for the market.This is the result. The recent sharp rebound suggests that investors have already begun to factor in this risk.
Specific Facts and Strategies – 5 Key Points
This article extracts the following key points from expert commentary. It summarizes the knowledge that investors should know.
Point 1: The market always follows a "recovery" pattern.
Even with a strong impact from the news, the stock market quickly recovers from its downturn.Soundness of the financial systemThis principle holds true as long as the underlying system doesn't collapse. Even after past shocks such as the COVID-19 pandemic and Russia's invasion of Ukraine, asset prices repeatedly plummeted, but ultimately the overall market recovered.
Point 2: Supply chain vulnerabilities still exist.
As a result of the situation in Iran, disruptions to energy, petroleum products, and iron pipe ACOs (Note: referring to supply routes such as ACVs) have already occurred during the conflict over the past few months. Many people need to be even more cautious in this complex situation.Stabilization of energy pricesThis is an important factor in investment decisions.
Point 3: The U.S. financial markets function as a "safe haven."
When a "risk-off" mindset intensifies, investors perceive the U.S. capital markets as more liquid and resilient than most other countries.The appeal of dollar-denominated assetsThis indicates that it is still highly valued. However, "long-term U.S. debt risk" is increasing, with the U.S. debt, which amounts to approximately 6,200 trillion yen, being a cause for concern.
Point 4: Geopolitical risks are beyond imagination.
Ray Dalio (founder of Bridgewater Associates) points out that "many investors have a short-term perspective and have not factored in the possibility of this war dragging on."Underestimation of geopolitical risksThis means that what is happening in the market is that energy transportation hubs are "out of the control of most people," and this vulnerability needs to be reflected in prices.
Point 5: What is "TACO trading" for investors?
Investors need strategies that take into account market resistance and political backlash. Because "President Tran frequently changes policies," investors must alwaysFlexible responseThis is what is required. This is not merely a technical term, but rather means "an investment mindset that responds to geopolitical risks."
Supplementary Information – The Meaning of "Transitional Period" and 8 Lessons Learned
Economic commentators point out that the current market environment is similar to the periods of "1913-14" and "1938-39."Historical period of uncertaintyThis means that the following eight lessons are important for investment decisions:
- Analysis of the current state of molecules – An extremely serious problem is that it is difficult to measure the effects immediately.
- Supply chain vulnerabilities – We are likely in a transitional period right now.
- Trump's hardline stance towards Iran – This significantly impacts investment decisions.
- "Imagine a major disaster and prepare for it." – A wise bet
- Both physical products and services – Inflationary factors in "physical goods" that cannot be easily printed like banknotes.
Bill Deckman also points out the importance of "complacency trading," a fund designed to warn against investors' "overconfidence."A warning about the risks that excessive confidence can create.is.
Supplementary information: The concept of "continuous and physical inflation"
Economic analysis that considers "physical goods" that are actually necessary for people's lives, rather than things that can simply be printed like banknotes, is very important in verifying the stability of current energy prices and the soundness of supply chains.
Rising prices for servicesとProduct price increaseIf these things happen simultaneously, failing to understand that the source of "innovation in services and cyberspace" up until now has been "physical goods" will cause us to lose sight of the future direction of economic growth.
Summary
The stock market always operates amidst risk and uncertainty. Geopolitical tensions, pandemics, trade wars, and more—the challenges modern investors must face are immeasurable. However, even in these difficult circumstances,The principle is that as long as the financial system does not collapse, the market will recover.It exists.
The important thing is not to simply avoid it because "there is a risk",How to perceive and utilize risksUnderstanding market recovery patterns, recognizing supply chain vulnerabilities, and not underestimating geopolitical risks—this is what a modern investor should be.
Furthermore, we must not neglect the historical perspective. The current environment is considered to be similar to periods such as "1913-14" and "1938-39."Period of uncertaintyMeaning,The present situation is similar to that period (history rhymes).Therefore, given these circumstances, it suggests that investors should always be cautious.
"Imagine and prepare for a catastrophe" is a wise investment strategy. The lesson that overconfidence creates risk necessitates flexibility in responding to market changes. Furthermore, understanding both "physical inflation" and "rising service prices" is essential for accurately grasping the modern economy.
In the end, what can be said is,"Even if the crisis is already priced in, what's important is how investors themselves perceive that risk."That's the point. Rather than being chased by market changes, making investment decisions based on calm analysis and preparation is the key to long-term success.
