The more everyone else is selling, the more I find myself checking prices. Maybe contrarian investing just suits my personality—whenever I see news about a falling market, I catch myself hunting for a buying opportunity. But I do not buy just anything. There are three things I always check.
Point 1: Work out why it is falling
A drop is not always the same kind of drop. Is the company's business really getting worse, or is the whole market simply sliding? The two mean completely different things. I read the earnings and the news, and only when I can tell that the company itself has not weakened—the mood is just bad—does it even make my shortlist.
Point 2: Check the balance sheet and cash on hand
Because contrarian buying happens during a decline, I have to assume the price may fall further. So I always check whether the company has too much debt and enough cash. Weak finances can finish a company off in a downturn, so I never compromise here.
Point 3: Diamond-hand it. Sink or swim together
KAZUKIN basically buys stocks assuming he will hold them for a long time. I almost never cut a loss just because the price dipped a little. Diamond hands. Sink or swim together. That is the mindset I buy with.
Of course, a falling price makes me nervous. “Is it still going down?” “Did I buy in the wrong place?” Still, if the company's earnings and finances have not collapsed, I will not let go of it just because of the price. Since I am buying against the trend, I accept from the start that it may fall further after I buy.
So what I care about is:
- Separating whether the drop is caused by the business itself
- Checking the balance sheet and cash on hand
- Having bought it, not letting go easily. Diamond-hand it
Sink or swim together. Holding on with total devotion... though there are some sad exceptions.
また下がってるね・・
Summary
Contrarian investing is never mentally easy, but simply deciding on your checkpoints in advance makes it harder for emotions to push you around. I want to keep these three points as my own criteria. I am still experimenting to see how far my homemade “Ore-shiki” theory holds up.
KAZUKIN Rating
- 🎯 Contrarian grit — ★★★★★
- 💰 Diligence in checking finances — ★★★★☆
- 😰 Mental stability in a downturn — ★★★☆☆
- 📏 Effectiveness of a pre-set tolerable drop — ★★★★☆
- 🧠 Not being ruled by emotion — ★★★☆☆
This article is KAZUKIN's personal opinion and record. Share prices, earnings and holdings mentioned here are as of the posting date and may have changed since. It is not a recommendation to buy or sell any particular stock, and it does not guarantee future profits. Please make your own investment decisions.