The Octogenarian Who Turned Day Trading Into a 1.8 Billion Yen Fortune
From rice fields to a 1.8 billion yen empire, Shigeru Fujimoto's story teaches us the power of resilience, strategy, and the never-too-late lesson of investing
In the high-stakes world of stock trading, few stories rival the rags-to-riches saga of Shigeru Fujimoto, who rose from the rice fields of post-war Japan to amass a fortune.
This 87-year-old Japanese investment legend rose from the depths of poverty and bounced back from near-total financial collapse twice, forging an unorthodox 70-year path to a staggering 1.8-billion-yen fortune.
Dubbed Japan's Warren Buffett, Fujimoto's journey defies convention. His story, chronicled in "87歳、現役トレーダー シゲルさんの教え 資産18億円を築いた (Shigeru's Teachings: Building a 1.8 billion Yen Fortune Through Day Trading)," is a testament to his market mastery, resilience, and a lifelong dance with the high stakes of day trading.
From Humble Beginnings to Market Maven
Born in 1936 in Hyogo Prefecture as the youngest of four siblings in a family of rice farmers, Fujimoto's early life was marked by post-war scarcity and hardship. Yet, it was during these formative years that Fujimoto's interest in the stock market was piqued.
"After I graduated from high school, I started working at a pet shop. I earned less than my peers during that time and felt very envious. I was so poor I had to save on commuting fares, so I often stayed overnight at the shop," Fujimoto recalled.
Then his path took an unexpected turn when he was introduced to stock trading by a regular customer from a securities company, who visited daily to buy food for his sick dog. The tales of limitless opportunities and immense wealth through investing in Japan's growing economy piqued Fujimoto's interest, yet he was initially too hesitant to dedicate his career to it.
At age 19, Fujimoto decided to leave the pet store to start a mahjong parlor in Kobe. Mahjong, a popular tile-based game in Asia that requires strategic thinking and risk assessment, was immensely popular in Japan in the 70s. Within 10 years he was running three establishments with 47 mahjong tables where he earned a significant monthly income of 2 million yen- a significant amount in post-war Japan.
The Pivot to Full-Time Investing
Throughout the 1970s and 1980s, while managing his mahjong parlors, he started engaging more and more in the stock market, motivated by the tales of those around him earning millions and the incredibly strong Japanese economy, in fact the fastest growing economy the world had ever seen.
His fascination with convertible bonds in the mid-80s marked a turning point, prompting him to sell his parlors in 1986 and dive headfirst into investing. This transition was driven by a potent combination of market foresight and an intense passion for trading.
Fujimoto experienced immense success in the late 80s, amassing a portfolio worth over one billion yen in just four years!
The Tide Turns
However, Fujimoto’s luck was about to turn…
The early 1990s were tumultuous times in the Japanese economy, marked by the infamous bubble burst. Fujimoto's portfolio suffering a significant decline, and his assets of one billion yen fell to 200 million yen in less than a year.
Further challenges arose during the Great Hanshin Earthquake in 1995, which devastated the Kobe area where Fujimoto lived. Fujimoto's house collapsed, and he narrowly escaped. The front door was crushed, so he and his wife managed to crawl out the window barefoot.
He lost almost all his belongings that day, including crucial documents that served as proof of ownership for many of his stocks and bonds. At that time, the markets relied heavily on physical records, making it nearly impossible to reclaim these assets without proper documentation. This loss was so traumatic that it led him to put his trading activities on hold for years...
Fujimoto Rises from the Ashes
It wasn't until 2002, with the advent of online trading, that Fujimoto fully resumed his investment ventures. At the ripe age of 66, despite having very little experience with computers, he purchased his first computer to engage in online trading. Bit-by-bit, he learned high-frequency computer trading and started utilizing three monitors for his day trading activities.
Today, at 87, Shigeru Fujimoto still trades nimbly on these three monitors from his apartment in Higashinada Ward, Kobe City. His fortune has ballooned to around 1.8 billion yen, and he manages about 100 stocks at any given time.
Fujimoto’s Rules to Success in the Stock Market
So, what's the secret to Fujimoto's wealth through the stock market, particularly in a market that has seen minimal growth over the past 30 years?
Fujimoto’s own take is pretty clear: it's not about the market as a whole, but about nailing the timing and picking the right companies.
Take Toyota, for example. While the overall market, as measured by the Nikkei 225, has had a modest increase, Toyota's stock has skyrocketed. We're talking about a growth rate for Toyota that's over 20 times that of the Nikkei's, or an 823% increase over Nikkei’s 38%, since 1990.
Reflecting on his journey, Fujimoto doesn’t leave it up to luck. He says, 'You've got to dig deep into the market, understand it inside out.' His portfolio, that over the years have gone through over 1200 companies he's handpicked, is proof of his relentless research and dedication.
So, what are his main lessons?
Love what you do
Mr. Fujimoto lives and breathes stocks. From dusk to dawn, his life orbits around the stock market. Like many top athletes, he follows a rigid daily routine, waking at 2:00 a.m. and retiring at 8:00 p.m., with his diet just as regimented.
Even his daily walks are occasions for stock contemplation. “If a house is to be built on a vacant lot, I check which construction company is involved," he says. His keen eye even extends to trains laden with cargo, indicators of a thriving transportation sector.
But, as Fujimoto cautions, “Day trading is not for the faint-hearted, nor is it a playground for beginners. Even after 69 years in the game, I still find myself occasionally stumbling into pitfalls.” His investment journey underlines the relentless demands and rigorous discipline required in this high-stakes world.
Buy Low, Sell High
He champions a 'contrarian' investing stance, focusing on acquiring stocks at perceived market bottoms and offloading them at their zenith. This method isn't just about going against the grain for the sake of it but necessitates a profound grasp of market dynamics and the nimbleness to act swiftly amidst its volatility.
Fujimoto's mantra, "Buy what's being sold, sell what's being bought," might sound straightforward at first glance, yet it encapsulates the nuanced challenge of this approach.
For instance, consider the current sentiment around Chinese equities. The market is rife with fear, prompting a broad sell-off across the board, even though numerous firms remain fundamentally robust. A savvy investor, well-versed in the nuances of Chinese stocks, recognizes this panic as a golden opportunity. By moving decisively when others are retreating, one can capitalize on this fear-induced undervaluation. Fujimoto's success is testament to the effectiveness of such a strategy; it's about identifying value where others see despair, thereby positioning oneself for substantial gains once the market corrects its overreactions. This contrarian viewpoint isn't just a tactic but a philosophy that underscores the importance of knowledge, courage, and timing in the unpredictable arena of stock trading.
Don’t Follow Other Blindly
Beyond his trading savvy, Fujimoto's wisdom extends to a skepticism of market trends and high-profile investment figures. “Chasing trends or investment gurus often leads to failure. It’s about understanding the market, not following others,” he advises. This skepticism is especially evident in his views on public information and market movements. He's even wary of the influence of figures like Warren Buffett, remarking, “It’s natural to see actions that inflate stock prices as manipulative ploys.”
His mantra is “Always do your own research. It is the only way to get unbiased information!”
In Japan, Focus on IPOs
Fujimoto has a special interest in IPO (Initial Public Offering) stocks. The success of 15 companies going public in March 2023, all maintaining or exceeding their initial offering prices, exemplifies this trend. In fact, Fujimoto has almost made 200 million yen just this year from buying and selling IPO stocks. “IPO stocks tend to go up," notes Fujimoto, "because Japanese people love new things”. It is truly an arbitrage that holds even truer in Japan than before. Almost like tradition, Japanese people flock to IPOs, sometimes even without any logical reason, and it would be a shame to not take advantage of that!
As it is hard to be allotted IPO shares in Japan, Fujimoto favors "IPO secondary investment" — buying shares post-IPO to benefit from the initial price surge. This approach, more accessible than direct IPO investing, requires astute timing and a strategic mindset.
Only Invest in What You Understand
His investment strategy closely aligns with his areas of expertise. He has a particular affinity for companies in the automobile, semiconductor, and trading sectors. If a company falls within these categories, he's on top of it - knowing their history, strengths, weaknesses, and potential for future growth like the back of his hand.
Opting to invest in the recent IPOs of Ibis and Nippon Knowledge, while bypassing Halmek Holdings (a business focused on female well-being), Fujimoto demonstrates prudence, aligning with Warren Buffett's principle: “Never invest in a business you cannot understand.”
The Legacy of the Shigeru Fujimoto
Shigeru Fujimoto, often hailed as Japan's answer to Warren Buffett, is more than just a tale of wealth amassed through shrewd investing. This 87-year-old trading titan's story is a masterclass in the sheer love of the game, showcasing that true investment prowess comes from an unyielding passion for the markets, strategic savvy, and a lifelong commitment to learning from each tick of the ticker.
"Age is just a number in the investment world," Fujimoto likes to say, living proof that your golden years can indeed be golden in more ways than one. His career, spanning an impressive seven decades, is a testament to the power of staying curious and keeping your finger on the market's pulse, regardless of the calendar's pages turning.
As Fujimoto continues to trade with the zeal of a much younger man, his journey is a beacon for the rest of us, proving that the markets don't favor the young or the old; they favor the bold, the informed, and the endlessly curious.