Is This Rebound Real? The Real Reasons Individuals Are Selling and How the Market Works

When stock market volatility is high, it is important to return to basics and understand the core factors that drive stock prices. The main factors affecting stock prices include corporate 'performance,' 'expectations' for the future, and investors' 'public sentiment.' These three elements interact in complex ways to determine stock trends.

Stock prices tend to rise significantly when sales and profits not only increase but their growth rate gradually accelerates. Conversely, even if sales and profits increase, if the growth acceleration slows, stock prices may stagnate or decline.

The current memory semiconductor industry is expected to see stagnating sales and profits until 2027 and 2028. The market desires continuous growth acceleration rather than such stagnation, but it is difficult to predict at present. In particular, because it is hard to accurately predict memory prices for next year, investors are bound to have fears about performance. This uncertainty can significantly impact the stock prices of memory-related companies.

The second factor in stock price increases is expectations for a company's future. This can manifest as expectations for future orders or innovative technology. However, such expectations often do not generate immediate cash flow, which can increase stock price volatility. Especially since orders always carry the risk of cancellation, this risk is reflected in the stock prices of companies that rise solely on expectations.

From the point where Hynix's stock price exceeds 2 million won, the market tends to be dominated by public sentiment. Fear and greed intertwine, creating large fluctuations in stock prices. This can be an opportunity for investors who believe in performance and growth to buy at low prices.

Public sentiment has the characteristic of rapidly spreading both fear and greed. This leads to high stock price volatility, and many investors lose their principles by being swept away by the crowd. Because there is a strong psychological tendency to follow others in one direction without knowing why, it is very difficult to make independent judgments without being swayed by public sentiment, requiring continuous effort.

In the past week, individuals sold approximately 4.8 trillion won, and foreigners net bought about 2.6 trillion won. Despite the market rebounding by nearly 1,000 points during this period, individual investors' selling pressure continues, indicating that individual fear is very strong. Analysis suggests that the current trend is not enough to turn this fear into greed.

Analyzing the KOSPI chart reveals the importance of 'supply zones.' Many investors bought in the KOSPI 5,000-6,000 range at the end of last year, forming a strong supply zone. The KOSPI is currently rebounding from this bottom, suggesting that the supply zone acted as a support level and a low-price buying opportunity. Foreign investors' buying of stocks at this time is also presumed to be for this reason.

Therefore, the current rebound can be seen as a normalization process, and the prevailing opinion is that stock prices are indeed in a phase of some increase. Furthermore, stock prices usually do not die out at once but tend to show a secondary rebound, suggesting that at this point, stock prices are likely to continue their upward trend.

During this period, foreigners sold tens of trillions of won, and individuals actively bought, so it is estimated that many individual investors are stuck at these price levels. If the KOSPI reaches 7,500, individual investors who were at a loss are likely to sell due to their break-even mentality.

Considering investor sentiment, when a stock price returns to one's purchase price, and losses disappear or turn into a profit, a 'break-even mentality' is strongly triggered, leading to a tendency to sell. Therefore, when Hynix's stock price reaches around 1.95 million won, strong selling pressure from individual investors is likely to reemerge.

For example, positive news that could move market sentiment, such as an increase in memory unit prices or news of expanded data center construction from Nvidia, would be necessary.

In May, when Hynix's stock price exceeded 1.9 million won, foreigners significantly reduced their holdings, but on July 15, they increased their stake by about 3% in the 1.9 million won range. However, just 13 days later, on July 28, when the stock price fell to the 1.5 million won range, they sold their shares at a loss. This suggests that even foreign investors are engaging in short-term trading aimed at quick profits.

The current stock market rally is primarily driven by institutional investors. Institutional investors are buying, judging the current market as a low point. Foreign investors are also net buying, but they tend to diversify their purchases into other sectors rather than concentrating on Samsung Electronics and Hynix, and the scale is not enormous. Therefore, it can be presumed that the forces entering the market currently might also be aiming for short-term profits by entering supply zones and identifying them as low points.

It is crucial to refer to information from the US stock market to predict domestic market trends and maintain an objective view of the companies one invests in accordingly. It is dangerous to blindly believe that one's account will necessarily recover just because it's showing losses, or that it will keep rising just because it's showing gains. It is important to avoid the attitude of viewing stock investment solely from one's own perspective and to respond flexibly to market trends.

When investors' losses, which were -40%, decrease to -10%, a decisive choice to sell before reaching break-even is necessary if market trends start to worsen. Many investors often miss the timing to sell due to regret, thinking 'it will go up tomorrow.' Stock prices always fluctuate and many variables exist, but investors tend to invest solely based on their feelings. Therefore, it is important to boldly confirm losses and respond to the market when trends change.