What caught my attention during a week when even defensive assets looked a bit unreliable [News x Investment Psychology]
What caught my attention this week was that not only stocks, but even assets expected to play a defensive role looked a bit unreliable.
If only stocks fall, it's easier to accept.
But when bonds are also heavy, and gold doesn't look as reassuring as expected,
I think it becomes harder to stay calm than the numbers alone would suggest.
That was exactly the feeling I had this week.
Rather than a major collapse, it was more about not feeling secure even though I'm diversified for protection.
That slightly uncomfortable atmosphere left an impression on me this week.
1. Weekend figures (4/3)
Nikkei Stock Average: 53,123 yen
TOPIX: 3,645 pt
USD/JPY (at 5:00 PM): around 159.98 yen
2. The atmosphere this week
This week, it wasn't just that stocks were weak; it was a week where, in situations where one would want to turn to defense, even bonds and gold looked a bit shaky.
On April 1st, news broke that U.S. financial advisors were bracing themselves ahead of the second quarter.
The backdrop included multiple overlapping anxieties, such as the situation in the Middle East, the instability of energy prices, and caution regarding the private credit market.
What was impressive amidst that was that both stocks and bonds were weak, and even gold didn't seem to be providing the support I had hoped for.
Looking at bonds, the U.S. 10-year Treasury yield had risen from around 4.01% in early March to around 4.44% by the end of the month.
Gold also fell 13% throughout March, and perhaps because of that lingering effect, it was hard to see it as a place of security this week.
Moreover, this week there was an atmosphere in the market that made people think, “I want to shift a bit more toward defense.”
On March 30th, Morgan Stanley downgraded its investment rating for global equities and upgraded U.S. Treasuries and cash.
With the Middle East risk and the sharp rise in crude oil prices in the background, I think there was a fair amount of atmosphere focused on defense.
3. What I felt
Looking at the market numbers this week, I was thinking again about the feeling of not being able to feel secure even when diversified.
Originally, diversification is something you do with the expectation that “when one thing is weak, something else will support you a little.”
But this week, that premise seemed a bit shaken.
Stocks are weak.
If it were just that, it would still be easy to process.
But bonds are also weak.
Gold doesn't look like a straightforward source of security as it usually does.
When that happens, more than the price movements themselves, “I thought I was protected through diversification”—that sense of disappointment emerges.
Perhaps what makes people feel distressed isn't just that things went down.
The things I had set aside after thinking it through might not support my peace of mind as much as I thought.
Once that feeling emerges, it becomes easier for your own approach and way of thinking to waver, rather than just the assets themselves.
That was what bothered me a little this week.
I believe diversification is important.
But it doesn't necessarily keep your mind calm in every market situation.
I feel like I felt that obvious truth a bit more strongly this week.
4. Investment psychology
What tends to appear in weeks like this, I think, is the feeling of not being able to feel secure even when diversified.
You were supposed to be prepared, yet you can't stay calm.
You thought you were protected, yet your anxiety doesn't decrease.
When that happens, people start to doubt not just the assets they have, but their very method of protection.
However, I think it's a bit too early to conclude all at once that “diversification is meaningless.”
In the market, there are times when multiple assets move in the same direction in ways that are different from usual.
Especially when concerns like high oil prices, the Middle East situation, and rising interest rates overlap as they did this week, even assets expected to play a defensive role can look weak together.
The news article I read also reported that such multiple anxieties were weighing on investor psychology this week.
Therefore, what is important may not be to end with the thought that "even though I held a diversified portfolio this time, it didn't calm my nerves as much as I expected," but rather toobserve in what kind of situations my sense of security is most easily shaken.
5. A note to my future self next week
1. Look at what else was weak at the same time, not just the assets that fell
The market sentiment is quite different depending on whether it is a decline in stocks alone or a movement that includes bonds and gold.
2. Even if defensive assets are weak, do not immediately reject the defensive strategy itself
Do not judge everything based solely on one week of price movements.
6. To everyone who has read this far
How was this week's market for you?
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 (^-^)
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