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I don't even know what those companies do, and I have no confidence in them. Ah, hello. This is D-100 Body, a long-term investor in the Puddle trading method and leverage ETFs. Many people have asked me why I don't invest in individual stocks like China Electric (3x leverage), so I would like to explain the reason.
This is simply my personal opinion, so please take it as a reference only; I am absolutely not suggesting that China Electric or 3x leverage is wrong. I haven't simply set a 10-year timeframe for stock investing; I plan to do it for the rest of my life. I intend to invest in the stocks I have been watching closely and that seem most certain today.
I believe that when holding stocks, the most important factor is having absolute confidence in the investment stock and tracking method. This is because that confidence is connected to one's mental state and judgment. Most of the stocks you are currently investing in have likely fallen quite significantly.
Na Star 2 Beverage QLD, which I invest in with confidence, is also currently down 27% from its peak. Additionally, SMP 500 2x Leverage SSO has fallen 15% from its peak, and regarding semiconductors... With a 2x leverage USB, the current situation is a whopping 38% gain from the peak. However, I am genuinely not worried.
I continued to hold strong until recently. There may be some of you whose confidence in your stocks or investment methods has turned into doubt during this correction. If you are one of those people, to be frank, the probability of failure in electric vehicle investments going forward is very high. There will certainly come a time when an even bigger drop or crash occurs.
I will discuss this in more detail later, but this is the 3-year chart for China Electric Vehicle. It was launched in December 2020; it has been just over a year since its launch, and the return is a whopping 57%. If you look at the black circle, there have been about two instances in the past year where it dropped by more than 2%.
While we cannot know exactly how low China Electric Vehicle will fall during a crash, if you are holding this stock, you must be aware that it could drop by 30-10% whenever a correction comes. I am not saying that the future outlook for China Electric Vehicle is bad. I am not trying to say that it is absolutely a bad stock.
China If you are investing in electric vehicles or have the desire to invest, you must, of course, look at the holdings. How do the holdings look? The reason I am not investing lies precisely here. To be honest, I do not know those companies well, I do not know what they actually do, and I have no confidence in them.
Any stock can rise or fall at any time. Netflix plummeted 20% following its earnings announcement, and the same applies to all other companies. However, from my perspective, when Netflix plunged 20% and Tesla dropped 12% this time, the enthusiasm and SS that I am investing in were naturally affected and showed a decline as well.
Nevertheless, the reason I wasn't worried is that there are other stocks. Apple and Microsoft are grabbing the stocks by the collar and pulling them up after their earnings announcements this time. However, if I had invested in Chinese electric vehicles—for example, if they plummeted because of the high demand and the stock price fell and entered a correction phase for a few days—I would likely think, "Ah, I guess I should n't invest in Chinese stocks after all." Because I lack confidence, I wouldn't be able to keep up when a correction comes.
On the other hand, from a domestic perspective, Tesla this time... Even if there is a 2% plunge, or if Metacritic and Amazon show a downward trend, I am confident that other companies will eventually grab the market by the scruff of the neck and drive it back up. That is why, even if there is talk that the US stock market will be difficult for the entire year, I can still set a goal to increase my holdings.
If you invest 10 million won in a stock you lack confidence in, you feel afraid and anxious even at a slight drop; however, if you invest 100 million won in a stock you are confident in, you do not feel afraid or anxious even if you are told to invest at a 30% return like now. As I always say, ultimately, the amount of profit is more important than the rate of return.
Everyone knows that a 30% return like this represents a larger profit than a 100% return on 10 million won. However, you must have conviction to allocate a significant portion of the money you have worked hard to save and earn, and to use that money for long-term investment. Furthermore, once you have decided on a stock for long-term investment with conviction, you must know its approximate historical Max Drawdown ( MDD).
Simply put, MDD is the percentage decline from the peak. You must know the MDD of the stock you intend to invest in and the stock you are currently investing in. The reason is that you must assume that it could drop to that level at any time. First, the approximate MDD of Cure SPY from 2004 to the present is 50%.
If you are investing in Q and SP Wine, you must be prepared for a 50% drop at any time. Also, the approximate MDD of the 2x leveraged Quill Dual SSO from 2004 to the present is 80%. If you are investing in Q and SSO, you must be prepared for a drop to around 80 percent at any time. During the current correction, it has fallen by up to 34% based on QLD and up to 23% based on SSO.
You need to look at the MDs and check whether you can actually hold on. You must think that you can somehow endure it, and that you will invest with the mindset that you are mentally prepared to reach that level, which you painstakingly picked out. Even Warren Buffett cannot escape the "King of Crashes." During the recent COVID crash, did Warren Buffett sell in advance and buy at the bottom?
No. 60 trillion Honshu spent double the bytes. However, Warren Buffett stated that nothing can stop America and that America will win again. Warren Buffett has conviction in his own investment stocks, and he holds a certain proportion of cash. For the sake of my commentary and to prepare for any unforeseen circumstances, I advised you to keep 10% to 30% of your cash—considering it as a separate investment stock in addition to the funds you will use for every exercise—tailored to your mentality and investment tendencies.
And you are not spending all that money right now; you can use just a little bit more in times like this. However, those who do not currently have cash invest it all because they feel it is a waste to let it sit idle. I believe that one's investment capacity is determined by how much conviction one has in the stocks and investment methods.
And based on my standards, the reason I am not anxious even though I have invested about 100 million won in stocks and my return has dropped by about 25% and turned into a loss is because I have conviction. The most probable way for an individual investor to reach above the tracking stocks is the minimum of upward-trending stocks.
I believe the strategy is to hold onto investments for over 10 years. Most of you are likely familiar with this method as you have likely seen it on YouTube. However, it is rare to see people around us who actually succeed at it. This is because it is both the easiest and the most difficult method. Therefore, you must change your investment mindset.
I work hard and immediately deposit the money I earn into my stock account. Every month, I set aside only my living expenses and the amount I see from the market reaction, and I immediately transfer the rest to my stock account. Even if I don't use that money right away, I simply transfer it directly to my stock account.
Of course, I look at the rate of return, but I prioritize the total assets in my entire stock account. My goal is not just the rate of return, but for my total assets to grow—not just my stock assets, but my financial assets as well. I find satisfaction in seeing my balance look exactly the same as it did three months ago, even though I withdrew 40 million won—not simply because I received a 20 million won profit this year.
It makes me think, "I worked hard to save and invest." However, I don't invest just anytime; I continue to make staggered purchases during market corrections like this. Before that, I keep accumulating investment capital during market openings, preparing for the corrections that will come again. Today.
That's all for the video. I hope you all have a wonderful holiday, and I'll see you in tomorrow's video.
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