The Story of How I Took a 15-Year Detour Before Arriving at Index Investing: Tales of IPO Investment Failure (Reverse FIRE Realization Record 7-2)

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A morning intoxicated by the sound of the bell

The sound of the listing bell makes my heart rate climb, even through a screen. On the morning I received my first winning email, I was toggling between market and limit orders with trembling fingers, genuinely believing, "I can make it all back in one go." Selling at the IPO opening price. Low risk, middle return. If I could just win the lottery, I would simply cash out according to the textbook. I want to tell that version of me from back then: the frenzy is short, but the planning is long.

This article is a record of my failures—a story of how I kept failing to win at IPOs, took a 15-year detour before I knew it, and eventually settled on index investing. I'm laying it all out here: the funny stories and the ones that aren't so funny.

The first win and the seeds of misunderstanding

The first win was vivid. The difference between the offering price and the opening price slipped into my account. The experience of having a portion of my monthly income move in just a few hours created a powerful "illusion of reproducibility." I thought I had created rules. Stick to selling at the opening price, exit mechanically at a certain rate of increase, don't look at social media. But early success frays the edges of rules. On my second win, I decided, "This one will run," so I sold half and held onto the other half. The reason was "the vibe." Within a few days, the stock price went back and forth to near the offering price, and the profit dwindled. It was my defeat for not having written down the "reason to hold" in advance.

The wall of lock-ups and the cold water of market conditions

The turning point is the lock-up expiration. Even if you feel like you've read the prospectus, it's meaningless if you don't write the expiration multiplier in bold in your notebook. Just before the week of expiration, the stock price rises on good earnings, and greed kicks in, thinking, "It can still go higher." However, after the weekend, supply and demand change completely due to selling by existing shareholders. The order book is thin; I want to sell, but I can't. If a worsening market environment is added to that, the escape route becomes even narrower. What should have been a short sprint of selling at the opening price had become a long-distance run where I was out of stamina before I knew it.

People without the skill of "winning and running" keep losing

IPOs are a festival of supply and demand. If you properly "win and run," there are indeed days that are close to low risk/middle return. However, everything depends on whether you can carry out that "win and run" as a discipline every time. I lacked that. The persistence to sell mechanically even on a half-hearted rebound. The obsession to manage the lock-up, multiplier expiration, and institutional selling pressure calendar with the same granularity as my life calendar. The aesthetic of retreating by saying, "If it falls below the offering price, I'll close the market for the day." All of these are eroded by emotions immediately after winning or losing. I moved by mood rather than mechanism, and I was tripped up many times.

The monster called cumulative "opportunity loss"

Losses from IPOs are visible in the account numbers. The troublesome part is that the opportunity loss is invisible. At the same time, I had started index accumulation with a small amount. It was growing reasonably well. However, I would stop the accumulation or withdraw funds to generate capital for IPOs. Regular deposits lose to the temptation that "if I win, I can recover it in one shot." 5 years, 10 years, 15 years. Looking back, the number of units I would have had if I had continued accumulating and the degree to which I had used up my tax-free allowance were surprisingly divergent from my actual account. A few "wins" were equivalent to slowly selling off the right to have time on my side. I had gotten off the track of compound interest while thinking I was winning.

The invisible costs of "winning" a public offering: Eleven fragments

"If I get it in a public offering, it's easier to win." What shattered that assumption was the invisible cost. From here on, I will trace specific scenes.

The first thing I felt keenly was the opportunity cost of capital lock-up. From the lottery to the delivery, the funds "sit idle" for several business days. Assuming there is an alternative that earns 1% annual interest, locking up 10 million yen for 7 days costs about 1,900 yen. The number is small, but it adds up if cases overlap. Moreover, if the deposit schedule for the new NISA is delayed by a week, the tax-free time decreases. I created a "sub-wallet for IPOs" later, but I should have created it sooner.

If you diversify your accounts to try to increase your winning probability, you then create invisible "secretariat" work: login IDs, one-time passwords, deadline calendars, and email sorting. The miscellaneous work of 30-60 minutes per company per month becomes 5 hours per month for 5 companies. An entire Saturday morning disappears. It was only after I messed up a "purchase deadline" several times that I introduced a password management tool and automated reminders for the three points of deadline, purchase, and delivery.

Friction from deposits, withdrawals, currency exchange, and transfers is also quietly painful. I get a winning notification during a time when instant deposits aren't available, and I pay the transfer fee for another bank. In US stock IPOs, the currency spread takes effect. Just gathering the scattered funds makes the night grow late, and the next morning's concentration is sapped. After that, I shifted to a combination of group bank and securities accounts, used a bank with many free transfer slots as a hub, and consolidated foreign currency in a dedicated account.

Next is the "maintenance cost" of preferential lotteries. To get the preferential quota of a certain securities firm, I "leave" investment trusts that are not low-cost. I also "let sleep" a certain amount of cash. Until I got into the habit of discounting the alternative yield of the parked funds to see how much the winning rate actually increases, I was blind for a long time. I calculated it, and quietly withdrew from quotas that I found would not be profitable.

Relationship costs of over-the-counter allocations affect the psyche. Responding to proposal calls, pressure for bundled products, and maintaining relationships with representatives. Short amounts of time are continuously taken away. I drew a line in the sand via email regarding "products I will buy and products I won't," and decided that over-the-counter, I would "only hold bonds and investment trusts for the long term." Once I told them "I'll do IPOs online" and organized the relationship, my heart felt lighter.

Thinking costs of research and selection are invisible fixed costs. Prospectus, lead manager, tentative conditions, supply and demand, lock-up. 30-60 minutes per case, 5-10 hours for 10 cases a month. The heat of social media amplifies bias and becomes noise in judgment. I fixed my strategy to "only sell at the opening price," created my own scorecard for purchase eligibility, and made it so I could judge in 10 minutes. On the day, I cut off social media.

Even though I won the lottery, I was afraid of the penalty for declining, so I ended up buying even when I was worried the price would fall below the offering price—a classic case of putting the cart before the horse. After that, I decided in writing before applying, 'I won't buy under these conditions,' and increased the number of 'passes' for securities firms with heavy penalties.

Execution infrastructure risks cannot be underestimated either. Access becomes concentrated when checking for lottery results, making the app sluggish. You struggle to log in because the one-time password expires, causing you to miss the deadline. Anyone can make a mistake entering quantities or limit prices. There are days when you need 'pre-job-hunting-level preparation': having two systems ready (PC and smartphone), saving order templates, and using a wired connection plugged directly into a power source.

And then there is the friction of taxes and administration. One-off gains are subject to withholding tax on the spot, causing small outflows of capital. The time spent bookkeeping to consolidate annual transaction reports from multiple accounts. The mental cost of calculating the impact on resident tax and national health insurance. Until I automated the process with a specific account (with withholding) and visualized my annual after-tax returns alongside the 'passive returns' of index accumulation, I was sick of filing tax returns every year.

Mental exhaustion is even harder to see. Every time I won or lost, my dopamine levels fluctuated, slowly eroding my focus on my main job. Nights spent losing more money by recklessly participating in the secondary market out of spite for consecutive losses. I redefined 'IPO as a process, not a lottery,' consolidated the application and result checking to once a week, and reduced the mental space it occupied.

Finally, the difficulty in reading expected value. The logic holds up as (Lottery Probability × Average Initial Price Fluctuation Rate × Allocation Quantity) - (Various Costs), but lottery probability and allocation quantity vary greatly by individual, and the quality of the initial price changes drastically depending on market conditions. I created a table to update my expected value based on my own track record, and in years where I don't reach my target return, I made it a rule to reallocate that time to building up my index investment contribution power.

From 'Frenzy' to 'Design'

One morning, I changed my ritual. Instead of the listing calendar, I made the business day after payday my ritual day. I set up automatic transfers for my new NISA contributions from my salary account and mechanized rebalancing to once a year on a fixed date. I turned off app notifications and quietly performed my end-of-month inventory check only. If I feel the 'urge to attack,' I use that for a side hustle, not the market. I strengthen the cash flow side, not the investment account. What I did is simple: I created the design to 'not do' things first. Don't let yourself touch the contributions. I finally realized that contribution power is justice.

Why Indexing? The Overwhelming Strength of 'Boredom'

Index investing is boring. That's why it lasts. Low fees pay off in the long run, the new NISA avoids reinvestment loss, and decision-making is just 'buy, hold, and rebalance once a year.' I switched to a plan to fill my 18 million yen tax-free quota in five years, and mechanically invested the surplus generated from my salary, business outsourcing, and expense optimization. The time I once spent on analysis and tension for IPOs was replaced by efforts to increase the unit price of my main job and side hustle, and the graph quietly trended upward. Eventually, a 'state where it doesn't matter if I quit or not' came into range.

Don't Throw Away IPO Lessons: Two Techniques I Kept

Even so, I kept two things I gained from IPOs. One is the technique of winning and running. The act of closing out while things are hot is also effective for work projects. The other is the habit of reading the worldview. It is training to imagine what will be taken for granted in 10 years from the KPIs and segment breakdowns in the prospectus. Even if you don't buy, you can learn. IPOs continue to be front-line teaching materials.

My IPO 'Failure Stories': Three Concrete Examples

Case 1: Initial price surge → The folly of 're-gripping'
I decided to sell half at +40% of the initial price and 'add on the dip' for the rest, but I got caught up in the heat and bought back in while it was rising. A few days later, it stalled, and I got hit both ways. The punishment for breaking the rules usually comes double.

Case 2: Disregarding lock-up expiration
I assumed 'the expiration is later' and skipped reading the lock-up expiration ratio clause. Selling pressure appeared sooner than expected, and I got hit by dumping in a thin market. 'Reading' and 'putting it on the calendar' were two different things.

Case 3: Blaming market deterioration on the weather
A cognitive bias where I tell myself 'this company is different' even when the index collapses. I failed to escape, deepened my unrealized losses by averaging down, and spent days melting my CPU and stomach. The switch to 'close the market for today' did not exist for me at the time.

A Map Given by a 15-Year Detour

If I were to list the advantages of taking a detour, it's that I gained strong conviction. Don't change your life with short-term bets. Design the source of cash generation (main job/side hustle). Enter a 'system that you don't touch' through tax-free × automation. Protect the boredom. A year of accumulating without touching it is worth more to me now than the days I won at IPOs. It took me 15 years to be able to think that way. It's late. But it's not too late.

Turning My Back on the Sound of the Bell, Depositing into the Account

I still like the news of listings. The sound of the bell, the photos, the smell of the prospectus. But I stopped shaking my fingers in front of the screen. I turn my back on the sound of the bell and just check if the automatic deposit on payday is working correctly. 'Investing is not a thrill, it's an option.' I finally understood what that meant.

Summary of Failures (+ Lessons on the Invisible Costs of Public Offerings)

• Early success breaks the rules.Write the script for a winning exit first.

• Lock-ups and market conditions are stronger than emotions.Put it on the calendar.

• IPO wins are visible, butthe opportunity cost of index funds is invisible. That is why you must decide on your deposit plan first.

• Public offerings are not free.Capital lock-ups, account fragmentation, deposit/withdrawal friction, preferential maintenance costs, relationship costs with brokers, the mental cost of research, penalties for declining, execution risks, tax friction, mental exhaustion, and uncertainty of expected value all add up. Visualize them with numbers and time.

• The path to winning isdeposit power × New NISA × automation. Demote IPOs to a 'secondary skirmish' and protect the boredom.

By the time the echo of the bell fades, I am not looking at the next order screen, but reviewing my next deposit schedule. Quietly, calmly. My 15-year detour has finally ended here. From now on, I will build up what is 'plain but strong'.