[Struggling Ant]② Establish Your Own Principles and Strategies to Stay Calm Amid Anxiety

A Long-Term Perspective Is Essential; Do Not Be Swayed by Short-Term Market Conditions
Must Also Build Knowledge to Understand and Analyze Various Macroeconomic Variables

[Asia Economy Reporters Jung Yoon Lee, Seon Ae Lee, Min Ji Lee] Last year, Donghak Ants shed tears during the prolonged downturn. Last month, with the stock market rebound continuing and the U.S. Federal Reserve (Fed) raising the benchmark interest rate by only 0.25 percentage points as expected by the market, the stock market conditions are gradually improving. Although the U.S. tightening spasms will continue, the opportunity to recover losses is not far away even for individual investors.

However, if one hastily repeats 'blind investments' just by looking at the January rally, the probability of failure will only increase. Compared to foreigners and institutions, individual investors are at an absolute disadvantage in terms of capital, information, and expertise, so it is necessary to refine one's own investment philosophy and trading principles first.

Since the beginning of this month, the domestic stock market has been in a breathing spell. Lee Seung-woo, Head of Research at Eugene Investment & Securities, said, "Last month, the possibility of a shift in the U.S. benchmark interest rate hike stance increased, and a dollar weakness appeared, creating a favorable environment," adding, "However, it is disappointing to expect this trend to continue into this month due to the corporate earnings outlook." Therefore, he added, "It is advisable to observe rather than chase buying and invest after confirming whether the situation actually improves."

There are also optimistic forecasts that a trend rise will appear once the adjustment is over. Yoon Seok-mo, Head of Research at Samsung Securities, said, "Since this year, attention has begun to focus on the possibility of a phase change in inflation, interest rates, and monetary tightening," adding, "Such changes are likely to be reflected in a trend, and the normalization process of the stock market is also likely to continue in a trend."

Yoon Seok-mo, Head of Research Center at Samsung Securities

Notable stock groups include Chinese reopening-related stocks and semiconductor stocks. Jang Hee-jong, Head of Investment Strategy at Hi Investment & Securities, explained, "As the reopening of China's economic activities such as media, entertainment, and travel is expected to show a consumption-oriented recovery, the benefits to Chinese consumer-related stocks are anticipated," adding, "Demand for semiconductors is also expected to remain steady due to device and service innovations such as artificial intelligence (AI) and big data."

He advises that investing in these stock groups from a long-term perspective is effective and desirable. Seo Sang-young, Head of Media Content at Mirae Asset, said, "The domestic stock market has moved in a way that when the economy is bad and approaches the bottom, it soon improves," adding, "It is better to respond to the market from a long-term perspective rather than focusing on short-term trading." He continued, "Foreigners move according to principles such as investing with a long-term view when corporate earnings are at their worst," adding, "Buying semiconductor stocks is because they believe the industry downturn is not far away."

Sangyoung Seo, Head of Media Content Division at Mirae Asset Securities

Pyun Deuk-hyun, Senior Specialist at NH Investment & Securities WM Masters, said, "Over the past two years, the domestic stock market has suffered after a 45% rise in 2020, and as a result, individual investors have developed a very pessimistic cognitive bias toward the market," adding, "Basically, they fail to properly read the global economic flow and keep hearing media reports that a recession is imminent, so they seem to think the current rally will end soon."

However, he explained, "The current global economy is heading toward a major turnaround point, and overall, the possibility of an upward trend is high," emphasizing, "Given the characteristics of the domestic stock market, one must keep in mind that success comes from buying when the market has fallen significantly and selling when corporate earnings are good."

There are also criticisms that individual investors repeatedly fail due to a lack of philosophy and strategy. Kim Ji-san, Head of Research at Kiwoom Securities, said, "(The reason individual investors fail) is because they are relatively more influenced by noise that causes anxiety in the stock market compared to institutions or foreigners," emphasizing, "To avoid being swept away by short-term market conditions, one must establish their own investment philosophy and adhere to a strategy."

Jisan Kim, Head of Research Center at Kiwoom Securities

To slightly improve returns, which are inferior compared to other market participants, it is also necessary to accumulate knowledge about macroeconomics. Kim said, "Considering that most individual stocks over the past 2-3 years have been greatly affected by Fed tightening, inflation, and other macroeconomic variables, studying macroeconomic indicators or events is necessary."

Seo also urges individual investors to spend time establishing investment strategies and further studying the stock market. He emphasized, "The fundamental principle in stock investment is to create and study your own investment philosophy or technique," adding, "Next, you should not think about deviating from that principle."