[2023 Gold Age Forum] ⑤ "Dangerous Asset Concentration Temptation... Diversified Investment Is the Answer"

Oh Geon-yeong, Team Leader of Shinhan Bank WM Division
"Mid- to Long-Term Diversified Investment in Terms of Assets, Regions, Currencies, and Timing"

Oh Geon-yeong, Team Leader of Shinhan Bank WM Headquarters, is giving a lecture on the theme of "Sustainable Asset Management and Diversified Investment Strategies" at the 2023 Asia Economy Gold Age Forum held on the 19th at the Bankers Hall in Jung-gu, Seoul. Photo by Kim Hyun-min kimhyun81@

On June 19, Oh Geon-young, team leader of Shinhan Bank's WM Business Division, stated, "Long-term asset management hinges on diversification," adding, "The greatest risk is the temptation of concentration." Speaking at the '2023 Asia Economy Gold Age Forum' held at the Bankers' Hall in Jung-gu, Seoul, he delivered a presentation titled 'Sustainable Asset Management and Diversification Investment Strategies,' emphasizing, "No one can deny the importance of diversification, but it is also a very challenging task." Oh, a regular guest on the YouTube channel 'Sampro TV,' is known for simplifying complex economic concepts and has earned nicknames such as 'Macroeconomics Master Instructor' and 'God Geon-young.'

Oh introduced four types of diversification: by asset, region, currency, and timing.

First, asset diversification involves investing by dividing assets into stocks, bonds, commodities, and so on, which is the most common concept of diversification. He noted, "During hot stock market periods like these, advising diversification often draws criticism like 'Why not go all-in on stocks?'" but stressed, "Diversification is about steadily accumulating wealth over a long term, even if it doesn't yield quick, large profits like stocks." He added, "Inflation can persist more stubbornly than expected, so it is wise to include assets like commodities in the portfolio. Rather than focusing on one to two years, one should maintain a balanced portfolio with a variety of assets to prepare for multiple uncertainties over a long horizon."

Next, regional diversification means investing within the same asset class but across different countries and sectors. Investors interested in overseas markets tend to focus mainly on the U.S. market. However, charts comparing the U.S. Standard & Poor's (S&P) index with other emerging market stock indices over decades since the 1980s show that growth centers have shifted continuously among Japan, emerging countries, China, and others, rather than one region maintaining steady strength for decades. Oh said, "No one knows what the next decade will bring, so regional diversification is necessary."

The third type is currency diversification. Referring to the 2008 global financial crisis, he described dollar investments as "insurance" that protects the downside of a portfolio. He urged, "Since investing is a long journey of 20 to 30 years until old age, there is no guarantee that an economic crisis will never occur. Like paying insurance premiums, one should gradually accumulate dollars." He emphasized, "When significant volatility hits even once, dollar assets will provide substantial support to the portfolio."

Finally, timing diversification is necessary for mid- to long-term retirement preparation to avoid risks during periods of increased market volatility by investing through monthly installment plans. He questioned, "Can the U.S. big tech or Korea's secondary battery boom last forever?" and reiterated, "For post-retirement long-term investments, one must resist the temptation of asset concentration," concluding his lecture.