What was the environment of the Japanese stock market like around 2000 (after the IT bubble burst)? How did this environment shape his early trading style?

Okay, this question is quite fascinating, especially for those wanting to understand the legendary trader B.N.F (Takashi Kogakure). Grasping the "soil" of his success is crucial. I'll try to explain it clearly in plain language.

The Japanese Stock Market Around 2000: A Gold Rush on the Rubble

Imagine a place just hit by a massive earthquake, full of ruins and terrified people. But at the same time, because of the chaos, treasures once locked away in safes were shaken out and scattered among the debris, ready for anyone brave and skilled enough to pick them up.

The Japanese stock market around 2000 was exactly like that.

1. Bear Market Dominates, Confidence Evaporates (The Big Picture: Despair)

First, understand that after its economic bubble burst in 1990, Japan entered the "Lost Decade." Throughout the 90s, the stock market languished in a seemingly endless downtrend. Towards the late 90s, it got a slight, temporary reprieve thanks to the global IT bubble frenzy.

But that didn't last. In 2000, the US Nasdaq bubble burst, and the shockwave swept across the globe instantly. For an already weak and ailing Japanese market, this was like being kicked while down during recovery. The result was:

Down, Down, No Respite: The Nikkei plunged from over 20,000 points in 2000 to barely over 7,600 points in 2003 – halved and then halved again. A pure massacre.
"No One Believes in 'Value Investing'": In this environment, if you told a Japanese person to "buy and hold long-term," they'd think you were crazy. They'd held stocks for a decade and seen their assets shrink by 80% – who dared to hold long-term? Extreme pessimism about the future prevailed.

2. Stocks Plummet, "Bargains" Everywhere (Opportunity: Oversold Gems)

In panicked markets, investors act irrationally. They sell indiscriminately, "throwing the baby out with the bathwater" – dumping good companies and bad alike, getting cash fast.

This created a curious phenomenon: many fundamentally sound companies saw their stocks severely "oversold," plummeting to absurdly low levels. Some even traded below their net asset value (meaning the cash each shareholder would get if the company liquidated was higher than the stock price). These stocks were the "gold" scattered in the rubble.

3. Huge Volatility, Wild Swings (The Game: High Stakes)

A bear market doesn't mean total absence of opportunity. Precisely because of panic and uncertainty, market volatility became extreme. A stock might hit its daily down-limit (a "limit down") in the morning, only to rally sharply ("turn red" – Japanese markets use red for gains) on some news by afternoon, then plunge again on renewed panic the next day.

These intense, short-term price gyrations were a long-term investor's nightmare, but for short-term traders, they presented prime arbitrage opportunities. It was like surfing – the bigger the waves, the more exhilarating it was for skilled surfers.

4. Rise of Online Trading, A New Weapon for Retail Investors (Tool: Revolution)

Coinciding with this period, Japanese online brokerages (like Matsui Securities) rose to prominence. They offered ultra-low commissions and convenient online trading systems. For ordinary people like Takashi Kogakure, this made profitable, high-frequency, short-term trading possible for the first time. Before this, the cost of such trading was prohibitively high for retail investors.

How Did This Environment Shape His Trading Style?

In this wasteland of "despair mixed with opportunity," Kogakure's trading style was almost "forced upon him," becoming the perfect product of its time.

1. Short-Term Only, Never "Falling in Love" (Core: In and Out Fast)

Since the macro environment was a relentless bear market, holding stocks long-term was financial suicide. Therefore, his strategy was always Day Trading or Swing Trading from the start, holding positions for very short durations: days, one day, even minutes. He never "fell in love" with any stock, cared not what a company would be like in five years, only whether it would rise or fall in the next five minutes or five days.

2. Targeting Oversold Stocks for Rebound (Method: Counter-Trend Sniping)

His core weapon was his famous "Counter-trend Bias Ratio" strategy.

What is Bias Ratio? Simply put, it measures how far a stock price deviates from its moving average (like the 25-day MA). Think of it like a rubber band: the moving average is its resting length, the stock price is your hand pulling it.
His Approach: In an era full of wrongly battered stocks, he specifically hunted for those oversold due to panic. Their prices, like an overstretched rubber band, were stretched far below their average cost line (extremely negative bias ratio). Like a physicist, he calculated when this "rubber band" was stretched to a point where the probability and force of a snap-back rebound were highest. Once he deemed the limit reached, he bought decisively, waiting for that rubber band to snap back – i.e., the technical rebound in the stock price.
Why Did This Work Then? Because in a panicked bear market, this kind of "overreaction" happened daily, giving him countless opportunities to deploy this method.

3. Riding the Trend, Taking Profits Not Risks (Philosophy: Respect the Market)

Though he bought "counter-trend" (during dips), his goal was crystal clear: only profit from the rebound. As soon as the stock bounced back from its oversold state to a reasonable level, he sold immediately, showing zero greed.

He understood perfectly that the bear market's primary trend was downward (the waves were crashing down). He was merely catching the brief upward recoil after a wave hit its lowest trough. He never fantasized about nailing the very bottom of a V-shaped reversal to "eat the whole steak"; he was satisfied just "drinking the richest soup."

4. Iron-Clad Discipline, Cutting Losses Like Breathing (Survival: Risk Control)

In such a wildly volatile market, the cost of a single wrong move was immense. His discipline was extreme. If he bought and the stock failed to rebound as expected but fell further, he would cut the loss immediately without hesitation. This emotionless, almost robotic execution was the fundamental reason he survived and thrived in that chaotic market.

To Sum Up

Takashi Kogakure's success didn't come from predicting the future or discovering fantastic growth stocks.

He found a statistical edge within an extremely pessimistic market filled with irrational panic and massive volatility. Using the emerging online trading tools, he acted like a hunter: waiting coolly for opportunities where prey (stocks) were mistakenly "slaughtered" by market sentiment. Then he struck precisely, profiting from short-term rebounds, day after day, accumulating gains piece by piece. Ultimately, he turned the ruins into his gold rush playground.

His style was quintessentially that of the "Child of Its Time," perfectly tailored to the unique environment of the early 2000s Japanese stock market – one rife with chaos and opportunity. In a different era or market climate (say, a calm bull market), this battle strategy would likely be far less effective.