A Sound Approach to Stock Investment for Individual Investors - Unmasking Common Fallacies

Masahiro Shidachi

1. Introduction

As interest rates in Japan continually mark new historical lows， the return on household financialassets， of which savings deposits generally comprise a large proportion， continues to shrink.

Perhaps one telling indicator of concern over this situation is the expanding media coverage of topicsrelated to asset management， as seen by the number of articles published (Figure 1). However， asinformative as these articles are about different aspects of asset management， they probably do nothelp readers very much in seeing the big picture.

In this paper， we examine what individual investors new to stock investment need to know regardingthe importance of a sound investment plan.