US and Korean Stocks: Miss This Proportion and Get Trapped

Investors believe they are the masters of their own capital, but they are easily swayed psychologically, developing doubts soon after buying stocks based on recommendations. Even large-cap stocks like Samsung Electronics tend to react sensitively to market reputation and news.

Such psychological distress frequently affects not only individual investors but also professional investors who bear responsibility for their recorded actions. It is particularly difficult to escape the cycle of greed and regret driven by stock market trends.

Mok Dae-kyun advised that it is crucial not to be solely engrossed in stock investments but to understand various global trends. Investors need to dedicate time to self-improvement, such as health and hobbies, to enhance their quality of life.

Securing a psychological safety net in preparation for career crises is an essential factor for long-term investment success, a lesson he emphasized from his experience as a fund manager. He stated that one must accept that there are many things to invest in besides stocks and acknowledge the breadth of the world.

Operating a 3x leveraged short product resulted in massive losses, ultimately leading to fund liquidation.

This served as a reminder that those who succeed with long positions can also fail with them, and after the failure, he deeply realized the importance of a risk management system. Mok Dae-kyun recalled that after an initial success, if it doesn't feel right, holding cash is often the wiser choice.

It is essential to continuously learn about new technological trends such as HBM, AI, and quantum computing. Continuous research and analysis are required to link investments with business models.

Mok Dae-kyun emphasized that simply understanding the trends of the times can lead to average investment returns, and consistently using economic newspapers to grasp macroeconomic trends is important.

It was pointed out that the government's tax reform proposal had strayed from its excellent original intent. Policies such as the stock price suppression prevention act faced issues where they were distorted during the legislative process due to the intervention of interested parties.

This demonstrates the reality of corporate governance in Korea compared to the US market, where the excellent intentions of policy-making are repeatedly undermined during implementation.

Complex corporate interests such as inheritance are unavoidable challenges in the process of advancing the Korean stock market. Even about 20% of S&P 500 companies in the US still face governance-related issues.

System improvements are the result of long-term accumulation, and Korea is undergoing this process in a condensed period, facing transitional difficulties of growing pains.

The role of directors has begun to change proactively through amendments to the Commercial Act. The duty of loyalty of directors to shareholders is a significant change that compels directors of listed companies to consider and reflect the diverse demands of shareholders.

These changes indicate a move towards a structure where investors' voices are more actively reflected in corporate management.

In the past, there was a strong tendency to focus on domestic investments due to the burden of comprehensive income tax. However, after 2020, with the emergence of innovative companies like Nvidia, investors' interests have shifted.

As the Korean stock market has seen a prolonged period of stagnation, the preference for investing in US stocks over Korean stocks has deepened.

When investing in the US, many individual investors tend to concentrate on IT or high-beta stocks. This results in investing in high-risk stocks in the US market, even when trying to avoid the volatility of the Korean stock market.

There is a pronounced preference for tech or biotech stocks over defensive stocks like Coca-Cola, and one must not overlook that the US market has no daily price limits, making short-term volatility risks even greater.

Asset allocation between the US and Korea should be an appropriate allocation based on the investor's own thoughts. US investment is not bad because of its excellent long-term upward resilience based on innovative companies, and because global capital converges there.

In contrast, Korea has the characteristics of a cyclical market, requiring flexible responses, while China demands a differentiated approach between traditional indices and new industry companies.

Differentiated asset allocation considering stability and risk is necessary.

The Korean market may have low valuation appeal due to the concentration in tech stocks, so a strategy accounting for this characteristic is required.

When US tech stocks are overheated, it's worth noting US pharmaceutical companies as an alternative. Due to concerns about former President Trump's drug pricing policies, US pharmaceutical companies have entered historically undervalued territory and are currently significantly undervalued.

The stable cash flow of US companies is more prominent compared to the biotech sector in the Korean market. Analysis suggests they show robust cash flow at a level not seen in Korea, making them highly attractive investments.

This situation suggests the possibility of a re-evaluation of the US pharmaceutical industry from a long-term perspective.

Japanese investors have a strong tendency to conform to and accept market trends. China, on the other hand, has a unique capital market structure under a communist system, where government influence is significant.

Korean general investors tend to be vocal and proactive. These differences in the propensities of capital market participants across countries are important considerations when formulating investment strategies.

China began to build its own economic path, moving away from the past attitude of studying the Korean economic model.

This reflects the confidence and somewhat aggressive sentiment within China around the 2017 trade war, clearly showing signs of decoupling between the US and China.

This was due to a combination of problems, including the widening GDP gap compared to the US, sluggishness in the real estate and financial sectors, and the impact on export companies from the trade war.

Even among local Chinese investors, skepticism about investment strategies emerged, leading to an overall difficult situation.

In the past, the Chinese stock market was a market where supply increased, but demand was not supported at all. This can be interpreted as the stock market being used for industrialization, and due to these structural limitations, investing was very difficult.

A strange phenomenon occurred where market capitalization grew while corporate value continuously fell, deepening the problem of market inefficiency.

Chinese high-tech companies such as CXMT and Huawei have emerged as formidable presences with aggressive technology roadmaps. CXMT quickly achieved significant results and established its market presence, and Huawei's design capabilities warrant cautious observation.

Most of the highly skilled personnel in these companies are overseas-educated individuals who studied in the US, possessing very logical and professional explanatory abilities. Therefore, it is essential not to disregard them but to pay close attention and recognize their potential as competing companies.

In particular, their technological advancements and talent pool suggest they could gain significant competitive advantages in the global market in the future.

Analysis suggests that the current correction and decline could actually be the starting point for re-evaluation.

If manufacturing strengths and financial development are combined, it is expected to be the starting point for Korea to leap forward as a developed country.

From this perspective, the current situation of the Korean financial industry holds future growth potential.