[Initial Moment] The Investment Report Card of 'Byeorakgeoji'

[Asia Economy Reporter Ji Yeon-jin] "The one who did nothing is the ultimate winner."

This was said to an acquaintance who said they did not have a stock account at a year-end gathering last year. Just a year ago, there was a new term called ‘byeorakgeoji’ (sudden pauper) for those who did not buy a house or invest in stocks, but the change over time is remarkable. Nowadays, as the liquidity-driven market caused by COVID-19 comes to an end, stories of individual investors suffering huge losses are often heard. One acquaintance said they lost 40 million won after investing in a junk coin last year, which was delisted. When Bitcoin prices were soaring to all-time highs, realizing a profit of 20 million won became the catalyst for putting all their savings into it. This story reminded me of the genius scientist Isaac Newton, who made a profit investing in the South Sea Company stocks in England, but after the stock price rose further, he bet his entire fortune again and lost everything. Newton reportedly said at the time, "I can calculate the movement of celestial bodies to the centimeter, but I could not calculate the madness of people."

The liquidity triggered by COVID-19 led to an investment frenzy among individuals trying to escape being ‘byeorakgeoji’. According to the Korea Financial Investment Association, from March 2020, during the COVID-19 crash, to February last year, the number of stock accounts increased by 8.43 million, from 29.91 million to 38.34 million, during the one-year liquidity market. During this period, the net buying volume of individual investors reached 87 trillion won in the domestic stock market, including 69 trillion won in KOSPI and 18 trillion won in KOSDAQ, an unprecedented scale.

Especially, the 20s and 30s generation flocked to the stock market and coins instead of real estate, which was a dream beyond reach. Growing up in a smartphone environment, they are considered the smartest generation in human history due to their rapid information acquisition, raising expectations that their stock investment behavior would differ from traditional ‘ants’. However, the actual results only reproduced the ‘herd effect’. The herd effect refers to investors blindly following others through learning and imitation during stock trading.

According to the report "Individual Investors in the COVID-19 Phase: Investment Behavior and Performance" published by Kim Min-ki, a research fellow at the Korea Capital Market Institute, at the end of last year, individual investors’ performance from March 2020 for one year underperformed the market return when considering transaction costs, and 60% of new investors suffered losses. Also, stock portfolios had a high proportion of small and mid-cap stocks and specific sectors, indicating a willingness to take high investment risks with an average high number of holdings. They also showed highly speculative investment behaviors such as high turnover rates, high intraday trading proportions, and frequent stock replacements. These behaviors were notably observed among new investors, young investors, males, and small investors.

The protagonist of the Osstem Implant embezzlement case that shocked the stock market at the beginning of the new year, Finance Director Lee (45), reportedly embezzled more than 200 billion won of company funds and invested in stocks, suffering losses exceeding 75 billion won. Known as a ‘super ant’, he bet several hundred billion won at once, trusting positive news from NCSoft and Dongjin Semichem, but cut losses when stock prices fell.

‘Byeorakgeoji’ means suddenly becoming a pauper due to a rapid rise in liquidity assets. It is the opposite of ‘byeorakbuja’ (sudden rich), reflecting impatience to accumulate wealth in a short period. It is time to remember the proverb, "More haste, less speed."

This content was produced with the assistance of AI translation services.