Bond Market Stability and AI Sector Growth Outlook, Sesanghakgaeron Live Analysis

Professor Lee Jong-beom analyzed that market conditions improved compared to last week, and especially noted that the U.S. Treasury's efforts to stabilize long-term interest rates were effective. He assessed that after Leopold transferred to Stardell, a lot of leverage was liquidated, and the market was ready for recovery. Geopolitical risks in the Strait of Hormuz are also expected to be resolved to some extent, and the coordinated efforts between the U.S. and Japan to stabilize long-term interest rates are positively impacting the bond market, he explained.

With employment indicators being ambiguous, a September interest rate hike is not expected, and as the probability of rate hikes gradually decreases, a stable upward environment is predicted until the midterm elections. He emphasized that the U.S. Treasury is working to create such an environment.

He added that major downward factors that could trigger inflation are disappearing, leading to expectations of overall market stabilization.

Professor Lee Jong-beom explained that the space sector, due to its long-term nature, is particularly sensitive to long-term Treasury yields. With long-term Treasury yields showing signs of stabilization recently, investor sentiment towards the space sector is expected to improve.

He stated that concerns about the U.S. long-term Treasury issuance plan (Q&A), which had previously caused interest rate hikes, have been resolved. Worries about Japan selling U.S. Treasury bonds for currency defense have also been preemptively addressed through U.S.-Japan cooperation. He assessed that these factors are alleviating upward pressure on long-term interest rates, creating an environment where stocks in high-growth areas like the space sector can bottom out and rise.

Professor Lee Jong-beom interpreted renowned investor Michael Burry's short position on the Neocloud sector as a positive sign for the sector. He noted that after the news of Michael Burry's short position, Neocloud-related stocks like IREN and CoreWeave showed an upward trend.

He assessed that Michael Burry's short position actually served to increase market interest in the Neocloud sector. He added that the attractiveness of the Neocloud industry has recently grown, leading major companies like Meta and SpaceX to enter this field.

Therefore, he emphasized that Michael Burry's short position had the paradoxical effect of instilling confidence in the sector, and he views the entire Neocloud sector very positively.

Professor Lee Jong-beom stated that he got the impression that SpaceX is more actively pursuing the Neocloud business than its traditional space launch vehicles or satellite internet service, Starlink. This suggests that SpaceX is positioning itself as a key player in the Neocloud sector.

He assessed that SpaceX has effectively become the leading stock in Neocloud and expects Elon Musk to speak more about the Neocloud sector in the future. This can be interpreted as an important signal supporting the growth potential of the Neocloud market.

Professor Lee Jong-beom analyzed that the geopolitical risks in the Strait of Hormuz have significantly reduced their impact on the market compared to the past. He explained that Hormuz's importance lay in triggering inflation through rising oil prices and increasing long-term interest rates, which would bolster U.S. negotiation power.

However, with long-term interest rates currently stable and oil prices not rising significantly, he judged that the Hormuz blockade would not have a major market impact unless oil prices surged to an extreme of $200. He added that given the current difficulty for oil prices to even exceed $100, the Hormuz risk is not a major market variable.

Professor Lee Jong-beom confessed that his attempt to enter the fashion business through the 'Onedayconia Club' was more challenging than expected. Despite using high-quality fabrics, he explained that his employees faced many difficulties due to the fragmented structure of the fashion industry's complex production process, involving fabric suppliers, pattern makers, sewing factories, printing, and embroidery houses.

He stated that the fashion business was not as easy as he had thought, and he is currently selling inventory at nearly a 60% discount, below cost. He admitted that this is essentially a 'closure' state, close to liquidating the business.

Professor Lee Jong-beom affirmed that if he could only invest in one industry until 2030, he would choose AI. While there will be changes within the AI sector, he plans to continue investing heavily in the Neocloud area, especially until next year.

He added that it is meaningless to predict the specific situation after 2028 due to the rapid pace of AI industry development. He emphasized the need to respond flexibly to short-term trends, as market conditions change quickly even within a month.

Professor Lee Jong-beom assessed that technological advancements in the quantum computing sector are progressing faster than expected. He believes that the U.S. is increasing national investment in quantum foundries to reduce its reliance on Asia for the semiconductor industry, suggesting that the era of quantum computing may arrive earlier than anticipated.

He originally expected 2030 for quantum computing commercialization, but Google moved this date forward by one year to 2029 in April of this year, and it could be shortened by another year to 2028 next year. Accordingly, he stated that while he does not heavily weight it in his portfolio, he is gradually making long-term investments related to quantum computing.

Professor Lee Jong-beom cited the deep learning curve and the 'forced HODL' characteristic as attractive aspects of unlisted investments. He explained that unlisted stocks typically tie up capital for 3 to 8 years, which is both an advantage and a disadvantage as it requires a minimum investment period of 5 years or more.

Since investments must be maintained for a long period, high returns can be expected if good companies are selected. However, forced HODL acts as a disadvantage in terms of liquidity. He emphasized that unlisted investment can be an opportunity to practice looking into the future, as it requires a long-term perspective, even looking ahead to the election after the next one.

Professor Lee Jong-beom stated that his experience with unlisted investments made him more deeply aware of the importance of management even when investing in listed companies. He explained that while the capabilities of the CEO or founder are crucial in startup investments, they tend to receive less attention in listed companies.

He emphasized that businesses operate for long periods—3, 5, 8 years—requiring numerous pivots (changes in business direction) to adapt to market changes. The ability to transition to the next business when falling behind competitors or when the business itself loses its appeal is extremely important, and the key capability to successfully lead these pivots lies with the representatives and management. Therefore, he learned the lesson that just as management is emphasized in unlisted investments, their capabilities should also be closely examined in listed company investments.

Professor Lee Jong-beom predicted that the stablecoin market itself will continue to grow regardless of whether the stablecoin bill 'Clarity' passes. He noted that industry participants like Circle are lowering expectations for Clarity's passage, but he believes that even if it doesn't pass, prices might not fall and could even rise.

He pointed out that Clarity is not solely a stablecoin bill but covers the broader crypto industry, while the stablecoin bill 'Genius' already passed last year. Therefore, Clarity's impact will be limited, and while the stablecoin market might rise further with the overall growth of the crypto industry, it will steadily grow on its own, he analyzed.

He added that there are no more negative factors to reflect, and any Clarity-related negative news would already be reflected in major companies like Circle.

Professor Lee Jong-beom predicted that SK Hynix and Samsung Electronics could escape the chronic cycle volatility of the memory semiconductor industry through active shareholder return policies and future investments. He pointed out that foreign investors might view the failure to properly return profits to shareholders as a problem, and he believes that active shareholder returns will further increase corporate value.

He emphasized that with Samsung Electronics and SK Hynix projected to surpass Nvidia in operating profit to become the world's number one from next year, how they utilize this massive cash flow is crucial. He analyzed that if they preempt future bottlenecks by supplying memory cheaply to AI companies like Anthropic or OpenAI, similar to Nvidia, and acquiring equity stakes, their corporate multiples will continue to improve.

He assessed that the memory industry has largely moved beyond its past cycles. Major companies like Micron and SanDisk are entering into long-term fixed contracts of more than 5 years through 'New Business Models (NBM)' and 'Long-Term Agreements (LTA),' meaning it should now be seen as a 'super long-term cycle.' He diagnosed that a fundamental change has occurred in the industry itself, as the role of memory has shifted from a consumable used in consumer goods or computer components to a core production facility in AI factories.

He concluded that while such changes mean there won't be explosive surges like in the past, an environment has been created for gradual investment without cycle concerns.

Professor Lee Jong-beom announced that his book will begin pre-sales on August 19th. He stated that he plans to actively commence promotional activities for the book.

He added that in consultation with the publisher, he intends to appear on various external channels, including Money Comics, to promote the book.

News broke that Warren Buffett's Berkshire Hathaway made its first net stock purchases since 2022. While some interpret this as having missed out on previous market rallies, the fact that even Warren Buffett is buying stocks can be seen as a positive sign. His significant purchase of Google shares, placing it among his top 5 holdings, demonstrates Buffett's optimistic view on the AI sector.

Professor Lee Jong-beom analyzed that Warren Buffett seems to have started viewing AI infrastructure as a 'money-making factory,' similar to railroads in the past, capable of continuously generating wealth. It is highly likely that he judged AI to have a structure that can generate stable long-term profits, he explained.

He simultaneously mentioned Warren Buffett's net stock purchases, particularly AI-related investments, and Michael Burry's Neocloud short position, evaluating both pieces of news as very positive signals for the market. This reflects a shift in major investors' perspectives on the AI industry and overall market optimism.

These movements by major investors suggest that AI technology is solidifying its position as a long-term growth driver beyond a temporary trend, highlighting the importance of AI infrastructure investment.

Professor Lee Jong-beom predicted that concerns about overinvestment in the AI sector, currently raised by some, will largely subside after next year. He believes that market anxieties will gradually disappear as the AI industry rapidly develops and practical applications increase.

This reflects the expectation that the real value and potential of AI technology will become clearer to the market. Therefore, he analyzed that the seemingly overheated investment sentiment will also adjust to a more rational level over time.

Professor Lee Jong-beom stated that the ultimate goal of his YouTube channel is to transform all Korean investors into long-term investors, calling this an 'conspiracy.' He expressed his aspiration to create a culture where investors look at corporate value with a long-term perspective rather than being swayed by short-term price fluctuations.

This demonstrates his educational philosophy of helping individual investors develop healthy long-term investment habits and cultivate a steadfast investment mindset unshaken by market volatility.

Professor Lee Jong-beom stated that he currently trusts Bitcoin more than Ethereum. He pointed out that while Ethereum has high potential for development through new updates, its current high usage is not sufficiently reflected in its price movements.

Therefore, he added that it is necessary to observe Ethereum's process of achieving price increases based on actual usage a bit longer.

Professor Lee Jong-beom emphasized that a downturn is a time to spot investment opportunities. He stated that when opportunities arise during a downturn, he responds by retrieving 'scout' stocks sent out earlier or adjusting his cash allocation.

This strategy means flexibly managing assets during high market volatility and preparing to seize new investment opportunities. He added that adjusting cash allocation is one of his biggest investment principles.