Capital Gains
Living like Americans in the latter half of the 1990s!

[posted on September 12, 2003]


As the US economy recovers from recession, businesses are still shedding workers, creating what analysts call a "jobless recovery." (article)
By lengthy depression for a long time, Japan's standard employees are getting difficult to live an affluent life by only earnings from work like US workers.
Many employees almost never expect to get raise in salary except resourceful person in growing companies.
Hence it is necessary for us to learn the financial literacy of earning an additional income in order to keep a current quality of life.
So even Japan's bureaucrats, directors and managers in listed companies tend to be deprived of their economic special privileges.
It's so good to work a second job if so bring out your new talent.

Some people who invest in shares try to achieve financial independence in the future.
Many investors, of course including such people, search for Peter Lynch's elusive "ten-bagger," a stock which will gain ten times its original value.
But he said, such ten-baggers are much more common than we might expect, especially if we have patience.

The Dow's Ten-Baggers (The Motley Fool.com)
"Peter Lynch -- professional investor extraordinaire -- argues persuasively (and humorously) that individual investors can not only match the market returns and those of so-called experts, but can have better portfolio returns than them. He energetically points out that buying what you know (as opposed to buying what you know the "experts" are buying) is the key to such success and that the odds are in the individual's favor."
In the investment world a ten-bagger is considered the ultimate home run, the grand slam. It means you've made ten times your original investment on a stock. $1,000 turns into $10,000. $10,000 becomes $100,000. $100,000 becomes... you get the idea. Find enough of these ten-baggers over your investment career, and you're sitting pretty.

Warren E. Buffett who was named for Hollywood star and aspiring California governor Arnold Schwarzenegger's senior financial and economic adviser, is billionaire investor as well as Peter Lynch.
Their investment method is useful for us.

Rising in stock price after Iraq War brought me a new portfolio.
So my leisure expenses must be covered by capital gains, but not savings.
It follows that if I earn extra money, for example bonus, I should invest it in stocks, but not spend it as soon as getting.
Therefore I think of investing for both long-term and short-term.

When the American Stock Market had soared in the latter half of the 1990s, Japan's media said "many American had spent even in debt."
But to be precise, I understood it was a wrong editorial within the several months.
In short many people willingly tend to spend money by the capital gain than earnings from work.
For example, if I gain US$500 by an investment, I willingly spend it to buy something even if more than my profit by using credit card.
Why? I simply expext to gain by an investment again.
Soaring market brought Americans spending money, and then so brought about soaring market.
It must have been Amercan new economy then.

Everyone welcome rising in stock price.
Nobody get angry about it.
Many people willingly tend to spend a perquisite, including capital gains.
"I would like to make a trip by income from the investments." I can find such messages on some BBS.
So I hope to crowd my luck.

When the boost in salary cannot be expected any longer, won't you find a new way to get an additional income?
I heard experienced investors can derive a profit from even the down trend market by using short sale.
It is important to take a different financial stance even if many people are economically challenged.
It may not be too much to say that success of investing will bring common workers to get ahead of the rat race and the fast track to journey to financial freedom.

"An equity investment is very high-risk."
Some people, especially many Japanese say so and back away from an investment.
But nobody get the knack without experience, said the instructor of the investing seminar.
There's nothing surprising.
"Your government and company cannot assure of a livelihood after retirement any longer," said Robert Kiyosaki, the author of "Rich Dad Poor Dad.


´╝ťfinancial dictionary: Investopedia.com>
CBS MarketWatch Hoover's Online Quicken.com
Whisper Number.com Smartmoney.com Briefing.com
Stocks Abroad.com Bank of New York ADR ETF Connect

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The journey to financial freedom
Are Japan's stock exchanges speculative?
(The journey to financial freedom - Part 2)
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