Chasing Soaring Stocks Is Risky… Market Cools Down

She stated that she bought TissueGene at around 100,000 won, entering the market after its peak of 149,000 won. However, she experienced a painful loss, losing her entire investment as the stock subsequently hit consecutive daily price limits.

This experience symbolically illustrates the risks that can arise when chasing rapidly rising stocks too late. When investors aggressively buy stocks that have already surged, they become vulnerable to unexpected negative events or market volatility, significantly increasing the potential for substantial losses.

Kim Ki-eun's current portfolio status reflects the difficult reality faced by individual investors. She confessed that out of approximately 20 stocks she holds, 18 are showing negative returns, with only 2 in positive territory.

This situation is largely consistent with what many individual investors are experiencing amidst recent market volatility and declines. The fact that most of her diversified portfolio is incurring losses highlights the challenging investment environment of the current market.

Expert Hwang Yu-hyun analyzed that escalating geopolitical risks from the Middle East, such as U.S. drone attacks and tanker attacks in the Strait of Hormuz, are heightening market anxiety. These geopolitical factors, in particular, exacerbate interest rate volatility, directly acting as downward pressure on the stock market.

When U.S. Treasury yields rise, the attractiveness of the stock market relatively decreases, increasing the likelihood of funds shifting to the bond market. Furthermore, rising oil prices can increase cost burdens for companies, leading to deteriorating performance, which then spreads as concerns about overall economic growth.

These complex factors are increasing market unpredictability, dampening investor sentiment, and are believed to be fueling the overall decline in the stock market.

This is a significant decrease compared to the 50-60 trillion won recorded during the market's best performance this year.

The sharp drop in trading volume indicates a decline in market vitality and, due to a lack of liquidity, leads to funds being trapped in limited sectors, only accelerating the speed of sector rotation. This intensifies the concentration of investment in specific theme stocks and perpetuates the underperformance of other sectors, diminishing overall market vitality.

They argue that such predictions are often already reflected in the market or only commented upon after the actual outcome, making them unreliable as a basis for practical investment decisions. Instead, they emphasize the importance of thorough leverage and account management.

Indeed, investors who have achieved significant returns in the stock market often did so by consistently adhering to their investment principles and risk management strategies, rather than relying on specific indicator predictions. This suggests the need to acknowledge market unpredictability and prepare for volatility that can occur at any time.

In conclusion, it was emphasized that managing aspects directly controllable by individual investors, such as leverage usage, stock allocation, and cash proportion, is a wise investment strategy, rather than being fixated on macroeconomic indicator predictions.

This is analyzed as a strategy to pressure the market until the very end to achieve dramatic agreements or policy announcements before the election.

The possibility of resolving geopolitical risks being coordinated right before the election cannot be ruled out. Investors need to approach cautiously, considering the impact of such political uncertainties on the market. Portfolio management and flexible responses are required to cope with the volatility expected throughout the second half of the year.

Experts warned that in the market volatility expected for the next two months, trying too hard to achieve 'positive alpha' might instead result in 'negative alpha'. Alpha refers to returns exceeding market returns (beta) due to one's skill or gains from specific sectors. However, in the current unstable market, hasty credit purchases or quick shifts from existing leading stocks (e.g., electronics, NICS) to other sectors can lead to losses.

During this period, being content with market returns and avoiding reckless chase buying or frequent stock changes is presented as a wise strategy. In other words, it is emphasized that the real benefit lies in accepting the overall market flow and focusing on maintaining stable returns, rather than trying to beat the market with one's own skills.

Ultimately, in a market like the current one, being content with 'beta returns' and focusing on risk management is advised as the way to avoid 'negative alpha' and preserve assets.

They explained that companies' core identities are shifting to new areas, moving away from the business content that represented them in the 80s, 90s, and 2000s.

Specific examples include Hyundai Motor, which is transitioning from a traditional car manufacturer to a robotics and physical AI company, and SK Telecom, which is seeking to transform from a telecommunications company into a data center enterprise. Other major conglomerates such as Samsung SDS, LG Group, and Hanwha are also accelerating their efforts to improve their corporate structures to secure future growth engines in areas like AI, batteries, and biotech.

These changes by major corporations are not merely about adding new businesses but represent a fundamental transformation of their core competencies and visions. This is a significant trend that could reshape the landscape of Korean industry as a whole and create new investment opportunities.

Expert Hwang Yu-hyun warned that a situation where an entire specific sector rises sharply all at once is the most dangerous. This is because when an entire sector surges, it is highly likely that all available funds for investment have already flowed into that sector.

In other words, without subsequent demand, there is insufficient power to push stock prices higher. Conversely, if other sectors start to rise, funds may exit the previously surged sector, increasing the risk of a sharp decline. Citing examples of sector rotation seen in previously surging sectors like secondary batteries and cosmetics, he emphasized the need to be cautious about chasing overheated sectors.

Therefore, investors are advised to approach with caution when an entire specific sector rises excessively and, instead, consider a rotation strategy to identify the next sector to rise.

This is because the 10-year yield is a crucial indicator reflecting the market's future inflation expectations and economic growth rate.

On the other hand, he explained that the 30-year Treasury yield may reflect more speculative factors and thus may not necessarily correlate with declines in the benchmark interest rate. This suggests that the stability of the 10-year yield, which determines long-term market direction, is more important than short-term interest rate movements.

This implies that when forecasting the market, one must not only consider changes in the benchmark interest rate but also closely observe the trend of long-term interest rates. The stabilization of the 10-year yield will be a significant catalyst for investors to feel less uncertainty and channel funds back into the stock market.

This is because, from a sober perspective, it is considered difficult for previous leading stocks in the domestic market to become market leaders again.

This is interpreted to mean that rather than making frequent trades in response to short-term market fluctuations, it is important to maintain a wait-and-see attitude when there is no conviction. In particular, the judgment that a stock that once surged significantly will struggle to regain its past glory suggests the need to explore new investment opportunities.

New changes are being observed across all aspects of the market, including even the Federal Reserve's communication methods, making it difficult to analyze the market using traditional approaches.

The development of AI technology is changing the paradigm of entire industries, affecting corporate valuation methods, investment trends, and even the effects of macroeconomic policies. Therefore, investors need to recognize these fundamental changes and approach the market with a new perspective rather than solely relying on past experiences.

This suggests that when formulating investment strategies, instead of blindly trusting past data, the ability to comprehensively analyze the impact of new technologies like AI on the market and respond flexibly is becoming more important. A re-establishment of investment paradigms suited for the new era is required at this juncture.

Expert Kim Ki-eun assessed that August was a period of observation for discovering leading stocks, and it was a rational strategy to remain passive. However, she expressed the opinion that from September, it would be acceptable to gradually resume investments in line with market movements.

This implies that investment opportunities may open up as market uncertainties somewhat ease or the contours of new leading sectors begin to emerge. After a cautious approach in August, a more proactive stance in participating in the market is needed from September.

Expert Hwang Yu-hyun explained that the market is currently experiencing rapid sector rotation, with funds shifting from the cosmetics sector last week to the secondary battery sector this week. In such a market, it is difficult to accurately select individual stocks, so he suggested buying related ETFs (Exchange Traded Funds) when a leading sector dips as an alternative strategy.

For investors who feel burdened by individual stock investments, it may be advantageous to participate in market trends through products that invest in the entire sector, such as secondary battery ETFs, rather than insisting on specific stocks like Samsung SDI, LG Energy Solution, or SK Innovation. This can be an efficient way to diversify the risk of specific stocks while also participating in the growth of the entire sector.

Expert Hwang Yu-hyun strongly criticized that if investors remain passive with their investment funds stuck, their stock market experience will increase, but their skills will not improve at all. He emphasized that it is essential for investors to constantly explore what the market's leading stocks are and to make an effort to deepen their understanding of the market, even by purchasing just one share.

A market downturn should not just be a time to endure losses, but rather an opportunity to improve investment skills and prepare for the next bull market. The process of searching for leading stocks allows investors to develop various investment capabilities, including industry trend analysis, company analysis, and market sentiment assessment.

Therefore, he advised that even when stuck, actively participating in and learning about the market, rather than passively observing, will be an important foundation for long-term successful investing.

Unwise leveraged investment in highly uncertain times can lead to greater risks. He advised minimizing emotional judgments through principle-based investing and aiming for stable investments.