'My life's screwed': Korean investors stress out after AI bubble bursts
ft.com
ft.com
Baffling that this was approved, though less so if you don't assume the regulator has the general market participant's interests in mind
So...nothing really happened.
> Margin debt, which hit a record Won38.6tn ($27bn) last month as investors borrowed to amplify bets, has dropped to Won33.2tn after a wave of forced liquidations during the recent rout.
Looks like there is a lot of leverage left.
Standard margin accounts allow 2x overnight leverage and 4x day trade leverage (must close below 2x leverage at market close)
- what changed in the last week that did not change in the last 6 months?
1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.
2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing discounted Korean equities around 18-24 months ago.
3. This influx of capital along with South Korea's lack of regulation around retail investing led to the KOSPI rally.
4. Now that experienced funds are rebalancing, many retail investors that participated in the rally with limited knowledge got caught with their shirts off.
> what changed in the last week that did not change in the last 6 months
Larger emerging market and Asia funds that began the KOSPI arbitrage have hit internal metrics like IRR in the 20% range and are now rebalancing.
There's a reason South Korea is still classified as an "emerging market" in most risk indices despite being a developed economy.
When people are buying an asset speculatively, they often all enter the market at once, which drives up the price spectacularly. But then once they've all bought, what happens? That demand drops off; everyone who wants to own memory chip stocks already does. You're left with the value investors who already held and bought early, who see that their asset is now wildly overpriced and want to get rid of it. So the price then drops until that supply drops off and you reach a new equilibrium, often exacerbated by the speculators who see their position evaporate and want to get out.
If 100 people play a parlor game which the ratings agency has given"80% chance of winning", and 70% lose money instead...
so it's bursting now?
Kospi is up 72% year over year: https://www.google.com/finance/beta/quote/KOSPI:KRX?window=1...
It's up 30% year-to-date. It's even up 13% over the last six months.
The same is true for Samsung, except the numbers are even larger (in the green direction). Sure there must be people who screwed themselves in the short term, but this doesn't look like reasonably careful investors have anything to cry about as of right now.
But seriously, betting on stocks is not an "investment". This is like the first thing you gotta learn in order to not get gently-caressed over by the market. My rule of thumb: if it's not insured somehow, its just speculation (which can be profitable, but never an "investment").
If you are in the unfortunate position of not being able to afford a nice home, live somewhere less nice and try to build savings so that some day your children can afford a nice home.
>If you are in the unfortunate position of not being able to afford bread, eat something less expensive and try to build savings so that some day your children can afford bread.
See how this works when you conveniently dismiss the effects of severe structural problems in society as evidence of poor financial literacy?
If the supply/demand curve of housing is so extremely upside-down that the only way to get ahead of it is gambling, then maybe they shouldn't be increasing the population -- at the risk of sounding a bit heartless, it seems to me like the only real choice is to leave; a peninsula that's locked from the mainland by an enemy like north Korea means that resources must be too scarce for their population.
As I understand it the order of things for men* in SK is 1) housing 2) marriage 3) children
No housing means no wife means no children to afford a nicer home. So, they're incentivised to take big risks.
But I'm going to step out of this minefield now with the hope of someone who actually knows things providing some information. It just seemed like the original comment didn't give enough weight to context.
*Women in SK are as I understand it fighting a whole other battle.
Here I was thinking The Squid Game was a work of fiction.
The notion that poor circumstances somehow justify poor choices is extremely counterproductive, as the context of this thread should make abundantly clear.
This kind of discourse is so intellectually poor…
PS (ready for the downvotes): A ton of people are not wealthy by choice as well, I don't want to over generalize because this isn't true for all, but a LOT could master a new topic every month by just stopping Instagram for 1 hour a day and instead use that time to study and make money, so what, if they start in the direction of building wealth, suddenly they are assholes?