What I do when a stock market crash seems imminent
Hello, this is Tanaka.
The Nikkei Stock Average has been unstable lately.
Since May 2026, it has been in a range-bound market between 64,000 and 70,000 yen.
Signs of a crash? Even if so, nothing changes for me.
My investment strategy is always to have 500,000 to 1,000,000 yen in investment capital ready and simply invest in indices and high-dividend stocks.
I used to aim for investment capital to be 10% of my investment assets, but as my assets have grown, I have started deciding based on a fixed amount rather than a percentage.
Even if there is a possibility of a crash, I will leave it alone and not sell.
Reasons why I don’t sell even before a crash
In the first year or two after I started investing, I kept buying and selling repeatedly.
However, the reality was that indices like the S&P 500, TOPIX, and the Nikkei Average, which I left completely alone, grew my money the most.
You might be able to explode your assets by fiddling with them, but I realized that is nothing more than gambling.
In fact, my assets didn’t grow much when I did that…
So, I came to the conclusion that it is better to stop overthinking and just leave things alone.
In fact, this is what I do when a crash happens
It was the same when the market crashed due to Trump’s tariff shock.
I put the capital I had prepared into high-dividend stocks and increased my index investment contributions as much as possible.
Also, while I don’t usually use margin buying, I see it as an opportunity and use it a little.
Even when talking about high dividends, I am selective about the stocks.
I focus on stocks with as low risk as possible, and when I’m unsure, I put money directly into the 1489 high-dividend ETF.
I also bought the high-dividend ETF during the tariff shock.
Thanks to that, I now have an unrealized gain of +80%, and the annual yield from my purchase price has grown to 5.33%.
How do I judge when it’s time to buy during a crash?
In my case, I judge that the bottom of a crash is near when the VIX volatility index exceeds 40.
This is an index created based on the volatility of the S&P 500.
It is said that when the VIX exceeds 40, there is a 91.3% probability that it will be positive one year later.
Probability of being positive one year after VIX 40 or higher
Historical data from 1990 to February 2020
21 times / 23 times
Approximately 91.3%
This is easy-to-reference data, but you should keep in mind that it is not necessarily the bottom.
Let’s also consider world affairs and the causes of the crash.
So, is it going to crash?
No one can really know this.
The AI bubble might burst, or it might return to a range-bound market.
If I had to say, I would predict that it won’t crash, but such predictions are unreliable.
If you don’t know, my view is that the best approach is to avoid gambling and position yourself so that you are fine regardless of which way it goes.
Whether a crash comes or prices rise sharply, you can view it as an opportunity. Thinking this way makes it easier mentally and makes investing more enjoyable.