Whose words do you use to understand the market after an election? How 'a word from an authority' makes your heart lean on it [News x Investment Psychology]

In the market immediately after an election, 'words' reach you before the numbers do.
'Stable administration,' 'tailwind,' 'as expected'—headlines like these put your mind at ease, but they also quietly rewrite the premises of your judgment.

This week was one where that feeling was strong.

1. Weekend numbers (2/13)

• Nikkei Stock Average (closing price): 56,941 yen

• TOPIX (closing price): 3,818 pt

• Dollar-Yen (at 5 PM): around 153.40 yen

2. The atmosphere this week: 'Expectations' after the election ran ahead, while the yen's appreciation reflected the reality on the ground

In the first half of the week, Japanese stocks were strong due to expectations following the election results, and the Nikkei Stock Average even recorded its 5th largest gain ever at one point. Furthermore, during the week, there were moments when it

exceeded 58,000 yen during trading hours, making it a week where a 'bullish explanation' was easy to construct.

On the other hand, the currency market held a message in the opposite direction.
The yen was bought back after the election and shifted toward appreciation.

With interest rate hike speculation and 'intervention vigilance' easily intertwined, the market screen looked bright, but the reality on the ground was surprisingly unsettled—that was the situation.

And after an election, there is more 'commentary' than there is market movement.
It was a week where not only the material but also the volume of words increased.

3. What I felt: When 'subtitles' of reassurance are attached, more conditions are overlooked

After an election, the market suddenly feels like it has been 'understood.'
But this is dangerous.
Because a feeling of understanding does not mean that other conditions are also fine.

'Buy because it's a stable administration'
'It's rising because there are expectations'

Short conclusions like these feel good.
But because they are short, conditions are omitted.

For example, this week, would the view be the same even if the yen continued to appreciate?
Even if the overseas mood changed, could you endure with the same explanation?

If you feel like you 'understand' while those points are omitted, your judgment alone becomes light and premature.

This week in particular, it was easy for the strength of stock prices to be accompanied by 'subtitles of reassurance' like 'reassured by a stable administration.'

That is why, whenever I felt that subtitles had appeared in the news, I made sure to re-read it after adding the question, 'Does this hold up even with the current currency situation?'

And many of the 'subtitles' that increase after an election are commentary rather than the news itself.
You feel like you understand the market because of someone's words.

That is why I start by doubting 'how much those words are influencing my own judgment.'

4. Investment Psychology: Authority Bias

Authority bias is the psychology where we feel the opinions of people with titles or fame are 'heavier' than the content itself.
And what makes it troublesome is that this weight comes as a set with 'reassurance.'

Immediately after an election, commentary increases all at once.
Television, the internet, experts, and stakeholders all give you 'easy-to-understand reasons.'

As a result, this kind of substitution easily occurs in your mind.

• "The explanation is well-structured" = "Sufficient grounds for buying or selling"

• "An important person said so" = "It's okay for me to act on the same premise"

However, the market doesn't always move according to the commentary.
In fact, the more commentary there is in a week, the harder it is to pin down a single factor.

Even if the election brings a sense of relief, the atmosphere can quickly shift due to a stronger yen or overseas factors.
Premises are hard to keep fixed.

That is why, especially after an election when"the rhetoric is strong,"I only check the following two things.

1. Is that opinion a "forecast" or a "fact"? (First, draw a line)

2. If the market moves in the opposite direction, what part of that forecast falls apart?

Rather than doubting the authority, I doubt myself for using the opinion of an authoritative person as a reference.
This is especially effective during weeks like this one.

5. A note to myself for next week (3 points)

1. When you hear "expert commentary," first write down the "facts" and "opinions" separately.
Do not mix "facts that occurred" with "what might happen (forecasts)."
2. Do not believe opinions (forecasts) as they are; convert them into "your own conditions."
Do not immediately use "It will go up because of X" as a reason to trade. Write down just one thing that would make you act (price, exchange rate, interest rates, etc.) if it were you.
3. On days with intense commentary, postpone your conclusion until the next day.
Do only the gathering of materials on that day. Let your trading decisions sleep overnight.

6. To everyone who has read this far

What kind of week was it for you in the market?
If there was a moment that caught your attention the most, I would be happy if you could let me know in the comments, even if it's just a word (^-^)

■ Related notes

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