The greed and fear of KOSPI 8000
As the Korean stock market roars past the once-mythical KOSPI index of 8,000, Korean investors are facing the classic investor dilemma: greed versus fear. More than half of the Korean population reportedly has a stock brokerage account, the highest level ever. For those already holding stocks or exchange-traded funds (ETFs), greed is setting in, with the temptation to buy more. For the other unfortunate half, the fear of jumping into the market at its current dizzying level would be frightening, and the loneliest feelings in a herd-driven society. The history of the Korean stock market is littered with extreme cycles of boom and bust, often marked by retail exuberance, as we are seeing today. With each market bubble peak, there are theories that “this time is different.” There is never a better time than now to identify the factors that are indeed different from those that have not changed at all over time. By now, international investors are aware of the power of Korean retail investors, given their traditionally massive underweight position in equities. Normally, the Korean bull