[Inside Chodong] What to Truly Fear in Stock Investing

'FOMO (Fear Of Missing Out)' is a term coined by American venture capitalist and author Patrick McGinnis. In his book 'FOMO Sapiens,' he defined FOMO as 'the fear of missing out.' It refers to the feeling of loss when one perceives that others are experiencing or possessing something better, except oneself. McGinnis stated that the influence of FOMO is very widespread. In South Korea, it is especially frequently mentioned in stock investing.

In 2020, as the COVID-19 pandemic broke out, the stock market began to plunge and the market fell into panic. However, following this, a stock investment craze among individuals known as the 'Donghak Ant Movement' swept the nation, lifting the market out of panic and into an unprecedented boom. At that time, the FOMO phenomenon attracted attention. People, not wanting to be left out of the historic stock market boom, rushed into stock investing one after another.

Conversations among people were filled with talk about stock investments. "Someone bought a certain stock and earned this much," "This industry is booming these days, and what stocks are related to it?" Such discussions dominated. If you didn’t invest in stocks, you couldn’t even join the conversation. The fear of falling behind others and the worry that others were making money through stock investments while one was not led to the creation of countless individual investors.

Recently, the FOMO phenomenon has resurfaced in the stock market due to the secondary battery stock craze. The stock prices of EcoPro and EcoPro BM surged, followed by a sharp rise in POSCO group stocks, leading the secondary battery stock boom. Although the stock prices, which had been soaring since the beginning of the year, seemed to pause after adjustments in April, the rally resumed after June.

EcoPro’s stock price rose relentlessly from 110,000 won at the start of the year to surpass 1,000,000 won, achieving the remarkable feat of becoming the top stock in the KOSDAQ market for the first time in 16 years. On the 26th of last month, it even exceeded 1,500,000 won during trading, making EcoPro undoubtedly the hottest stock topic of the year. Watching news of secondary battery stocks soaring daily, people began to be gripped by the fear of being left out of the secondary battery stock craze and belatedly jumped into investing in these stocks.

Considering that EcoPro group stocks have already risen significantly, many individual investors have also targeted POSCO group stocks. POSCO Holdings, which was ranked 11th in market capitalization at the beginning of the year, climbed six places to 5th, and POSCO Future M rose eight places from 17th to enter the top 10. POSCO Holdings became the stock most purchased by individuals this year, with net buying of 9.4623 trillion won by individuals since the start of the year.

Investing in companies with high growth potential is natural. As electric vehicles become mainstream and the secondary battery business is expected to grow rapidly, secondary battery stocks are likely to receive much attention. The problem is that future value is excessively reflected in current stock prices, leading to the emergence of blind investors. Irrational overheating and blind faith are never desirable for the overall stock market or individual investors. The simultaneous sharp decline of secondary battery stocks on the 26th and 27th of last month showed that even stocks that seemed destined to rise can fall at any time, and the decline can be much larger than expected.

What investors should truly fear in stock investing is not the feeling of 'Am I the only one being left out? Am I the only one missing out?' but rather irrational overheating and herd behavior. Being left out or missing out alone does not necessarily lead to huge losses, but stepping into an irrationally overheated market can lead to ruin.