Why do many investors fail to make money even when the Nikkei 225 exceeds 60,000? The truth behind a distorted market where only stock indices rise
We have entered an era where the Nikkei Stock Average exceeds 60,000 yen.
Considering the history of Japanese stocks, this is a level that was once unimaginable.
Television and the internet report on rising stock prices, and news of a booming economy is everywhere.
However, many investors who hold individual stocks are likely seeing a completely different picture.
“The Nikkei is up, but my stocks are down.”
“There is nothing but news about high stock prices, yet my assets aren’t growing.”
“I don’t feel like Japanese stocks are doing well.”
Is this just my imagination?
When checking actual market data, a phenomenon is occurring in the current Japanese stock market where there is a significant divergence between stock indices and the movement of individual stocks.
And the cause lies in the structure of the Nikkei Stock Average index itself.
The Nikkei is up 685 yen, yet about 70% of stocks have fallen
October 28, 2026, was a very symbolic day for the Tokyo Stock Market.
The Nikkei Stock Average closed at 63,954.19 yen, up 685.82 yen from the previous day.
The rate of increase was 1.08%.
Normally, one would think that the Japanese stock market as a whole was strong.
However, the reality of the Prime Market was different.
From these figures, a surprising fact becomes clear.
Stocks that rose accounted for about 28%. Conversely, stocks that fell reached about 71%.
In other words, on this day in the Prime Market, about 7 out of every 10 stocks had fallen in price.
Despite that, the Nikkei rose by 685 yen.
Furthermore, the TOPIX, which shows the price movements of a broader range of Japanese stocks, fell by 0.14%.
It was a typical index-driven market where the Nikkei 225 and the TOPIX moved in opposite directions.
Even among the 225 Nikkei stocks, there were more decliners than gainers.
The Nikkei 225 is composed of 225 representative Japanese stocks.
So, were those 225 stocks really rising?
Looking at the official data for October 28th published by Nikkei Inc., the results are even more interesting.
In fact, even when limited to the 225 stocks that make up the Nikkei 225, about 62% had declined in value.
Even if the majority of the 225 stocks fall, the Nikkei 225 can still rise significantly.
The reason for this becomes clear when you understand how the Nikkei 225 is calculated.
The Nikkei 225 is not an index where all 225 stocks are treated equally.
The Nikkei Stock Average is fundamentally a price-weighted index.
It is calculated by adjusting the stock prices of the constituent stocks with a predetermined price conversion factor, summing them up, and dividing by a divisor.
Under this mechanism, the influence of each stock on the index is not the same.
Just because a company has a large market capitalization does not necessarily mean it has a large impact on the Nikkei 225; the structure is such that stocks with higher adjusted prices have a stronger influence on the index.
As a result, if a few stocks rise significantly, the Nikkei 225 as a whole will rise even if the majority of stocks are falling.
Looking at the composition ratio of the Nikkei 225 as of October 28th, the top stocks are as follows.
These four stocks alone account for approximately 34.75% of the entire Nikkei 225.
Despite there being 225 stocks, just four stocks hold more than one-third of the index’s weight.
Given this, it is only natural that the movement of the index does not match the movement of the vast majority of individual stocks.
What happens when capital is concentrated in AI and semiconductor-related stocks?
Companies related to AI and semiconductors have become a significant presence in the current Japanese stock market.
Advantest, Tokyo Electron, SoftBank Group, Kioxia Holdings, and Ibiden are easily attracting attention against the backdrop of AI investment and semiconductor demand.
According to official data from Nikkei Inc. on October 28, the ‘technology’ sector of the Nikkei 225 alone pushed the index up by approximately 861 yen.
However, the overall rise of the Nikkei 225 was approximately 686 yen.
The boost from the technology sector alone exceeded the overall rise of the Nikkei 225.
In other words, the gains were offset by declines in other sectors.
This situation symbolizes a market where capital is concentrated in a few influential stocks.
Of course, there is no problem with AI and semiconductor-related companies rising themselves.
It is a natural market movement for capital to gather in companies with high growth expectations and projected earnings expansion.
However, it is dangerous to judge that the entire Japanese stock market is performing well based solely on those gains.
Nikkei 225-linked investment trusts and individual stocks yield completely different results
What is important here is the difference between index investing and individual stock investing.
For example, if you hold an investment trust or ETF linked to the Nikkei 225, you can basically expect investment results close to the price movements of the Nikkei 225.
On the other hand, the situation is different for individual stock investing.
Suppose you hold 10 stocks equally, and 7 of them fall in price while 3 rise.
If the losses from the declining stocks are large, your total assets will be in the negative even if the Nikkei 225 is rising.
Conversely, if a small number of rising stocks increase significantly, you may make a profit.
The important point is that the Nikkei 225 rising and the stocks you hold rising are separate issues.
Furthermore, even with the same index investing, the results differ between Nikkei 225-linked types and TOPIX-linked types.
TOPIX is a free-float adjusted market capitalization-weighted index, and its mechanism for determining the weighting of constituent stocks differs from that of the Nikkei 225.
For this reason, even when the Nikkei Stock Average rises, as it did on October 28, the TOPIX may fall.
Even with index investing, investment performance varies depending on which index you are investing in.
Individual stock investors find it harder to feel the rise in indices
In individual stock investing, you analyze companies yourself and invest based on your judgment of their future potential and undervaluation.
However, even if a company’s performance is good, its stock price does not necessarily rise.
Stock prices reflect not only performance but also various factors such as investor expectations, interest rates, supply and demand, exchange rates, and the global economy.
Especially in phases where funds are concentrated in certain growth sectors, other stocks may be sold off or find it difficult to attract investment capital.
Undervalued stocks can even become even more undervalued.
Even if the dividend yield is high, it is not rare for the decline in stock price to exceed the dividend income.
That does not mean that individual stock investing is wrong.
There is a possibility of obtaining profits that exceed the index, and long-term investing that emphasizes dividend income has its own separate value.
However, it is not rational to expect your own investment performance to improve just because the index is rising.
In fact, the Nikkei Stock Average has also fallen from the 70,000 yen range in early October
There is another fact that should not be overlooked.
Although the Nikkei Stock Average has exceeded 60,000 yen, it is by no means rising in a straight line.
The closing price on October 6 was 70,683.98 yen.
In contrast, the closing price on October 28 was 63,954.19 yen.
The rate of decline during this period is approximately 9.5%.
Even though it has exceeded the major milestone of 60,000 yen, those who invested in early October may be experiencing losses.
In other words, even with index investing, profit and loss can change significantly depending on the timing of the investment.
One cannot assume that all investors are making a profit just by looking at the figure of “60,000 on the Nikkei 225.”
The Nikkei 225 figure is not the only thing you should really be looking at
If you want to know the reality of the Japanese stock market, checking only the closing price of the Nikkei 225 is insufficient.
I consider the following five indicators to be particularly important.
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Number of advancing and declining stocks: How widely the market rise is spreading across stocks.
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TOPIX price movements: Comparing this with the Nikkei 225 to check for bias toward certain stocks.
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Contribution to the Nikkei 225: Which companies are pushing the index up or pulling it down.
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Sector-specific stock price indices: Which sectors, such as semiconductors, finance, retail, or food, are receiving capital inflows.
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25-day advance-decline ratio: Checking the breadth of the market based on the ratio of advancing to declining stocks over a certain period.
In particular, the number of advancing and declining stocks is an indicator that is intuitively easy for individual investors to understand.
Even on a day when the Nikkei 225 rises by 1,000 yen, if there are overwhelmingly more declining stocks, it is possible that only a few stocks are driving the market.
Conversely, even if the Nikkei 225’s rise is small, if the number of advancing stocks is broadly increasing, it can be judged that the market’s base is expanding.
However, these indicators are not omnipotent.
One cannot judge a long-term bull or bear market based solely on the number of advancing and declining stocks in a single day; it is necessary to check by combining multiple dates and indices.
How should we think about future Japanese stock investment?
In a market where only a few stocks are rising, it is necessary to be more conscious of the difference between index investing and individual stock investing.
If you buy an investment trust linked to the Nikkei 225, it may appear that you are diversified across 225 stocks.
However, in reality, the weighting of the top stocks in the index is high, and it is strongly influenced by specific companies or sectors.
In that sense, investing in the Nikkei 225 is not perfectly equal diversification.
Since TOPIX-linked funds also have a bias toward companies with large market capitalizations, it does not mean that it is absolutely safe just because it is diversified investment.
On the other hand, in individual stock investment, there are investment opportunities beyond the few large-cap stocks included in the index.
There is a possibility that companies with significant future growth potential are lying dormant within unpopular sectors or undervalued companies.
However, being undervalued is not synonymous with the stock price rising in the future.
Especially during periods when the entire market appears to be rising, it is necessary to pay attention to the concentration of investment targets, acquisition prices, corporate performance, and capital management.
A Nikkei 225 of 60,000 does not mean a victory for Japanese stocks as a whole
The Nikkei 225 exceeding 60,000 is a historic event for the Japanese stock market.
However, one cannot judge that Japanese stocks as a whole are performing well based on that number alone.
In the market on October 28, while the Nikkei 225 rose by 685 yen, approximately 70% of the stocks on the Tokyo Stock Exchange Prime Market declined.
Even among the 225 Nikkei stocks, there were more stocks that declined than rose.
Yet, the index still rose.
This is not to say that the index is wrong.
The Nikkei 225 correctly reflects a portion of the market according to its calculation method.
The problem lies in perceiving the rise of the index as a rise in Japanese stocks as a whole.
Admittedly, having many declining stocks and having many investors holding losses are not strictly the same thing. This is because an investor’s profit or loss varies depending on the number of shares held, purchase price, dividends, and timing of trades.
Nevertheless, the reason for the significant gap between reports of high stock prices and the actual experience of individual investors can be fully understood from these figures.
Because the Nikkei 225 is rising, Japanese stocks are profitable.
It is not such a simple era.
Rather, precisely because stock indices are in a high range now, it is necessary to calmly assess the reality of the market behind those numbers.
What is truly important for investors is not how many tens of thousands of yen the Nikkei 225 has reached.
It is what you invest in, what kind of risks you take, and how much profit you can ultimately retain.
Reference Materials
*This article is based on market data from October 28, 2026, and does not recommend investment in any specific financial products or stocks. Investing involves the risk of loss of principal.
(This article contains affiliate links.)