> Part of the problem was regulators’ decision in late May to approve 16 single-stock leveraged ETFs tracking Samsung and SK Hynix, which have been blamed for amplifying moves in indices and individual stocks.
Baffling that this was approved, though less so if you don't assume the regulator has the general market participant's interests in mind
we watched them change the rules in the US to force indexers to provide exit liquidity for the spacex IPO blunder via your dad's 401k. capturing the regulators is just part of what finance does.
> nearly half of its 880,000 clients who bought Samsung shares were now sitting on losses, while nearly 70 per cent of its 408,000 investors in SK Hynix were also in the red.
> Margin debt, which hit a record Won38.6tn ($27bn) last month as investors borrowed to amplify bets, has dropped to Won33.2tn after a wave of forced liquidations during the recent rout.
You can get SPAN margin if you have enough money, margin is calculated dynamically based on implied volatility and other metrics. I’m not very familiar with how it works, I have a regular margin account.
Standard margin accounts allow 2x overnight leverage and 4x day trade leverage (must close below 2x leverage at market close)
Price is the derivative of position changes - it reflects supply & demand in the market at that moment, which is often highest when everyone is entering the position.
When people are buying an asset speculatively, they often all enter the market at once, which drives up the price spectacularly. But then once they've all bought, what happens? That demand drops off; everyone who wants to own memory chip stocks already does. You're left with the value investors who already held and bought early, who see that their asset is now wildly overpriced and want to get rid of it. So the price then drops until that supply drops off and you reach a new equilibrium, often exacerbated by the speculators who see their position evaporate and want to get out.
1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.
2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing discounted Korean equities around 18-24 months ago.
3. This influx of capital along with South Korea's lack of regulation around retail investing led to the KOSPI rally.
4. Now that experienced funds are rebalancing, many retail investors that participated in the rally with limited knowledge got caught with their shirts off.
> what changed in the last week that did not change in the last 6 months
Larger emerging market and Asia funds that began the KOSPI arbitrage have hit internal metrics like IRR in the 20% range and are now rebalancing.
There's a reason South Korea is still classified as an "emerging market" in most risk indices despite being a developed economy.
It's up 30% year-to-date. It's even up 13% over the last six months.
The same is true for Samsung, except the numbers are even larger (in the green direction). Sure there must be people who screwed themselves in the short term, but this doesn't look like reasonably careful investors have anything to cry about as of right now.
But seriously, betting on stocks is not an "investment". This is like the first thing you gotta learn in order to not get gently-caressed over by the market. My rule of thumb: if it's not insured somehow, its just speculation (which can be profitable, but never an "investment").
Small retail investors comprise 66% of the market in SK. It's usually single unmarried people who make ridiculously big bets to try and get enough money to buy a house or get married. It's something to be pitied not hated.
From my very shallow understanding of the Korean market it's common to invest in high risk shares because a big win is the only way to afford a nice home. Financial nihilism, risk appetite etc. So it's far from only rich people.
But if an investment doesn't pan out, and your response is "My life's screwed", you couldn't afford the investment either. "high risk" is right in the name -- the win isn't guaranteed.
If you are in the unfortunate position of not being able to afford a nice home, live somewhere less nice and try to build savings so that some day your children can afford a nice home.
Now I'm on very thin ice and just based on youtube videos so if someone from South Korea reads this feel free to correct me.
As I understand it the order of things for men* in SK is 1) housing 2) marriage 3) children
No housing means no wife means no children to afford a nicer home. So, they're incentivised to take big risks.
But I'm going to step out of this minefield now with the hope of someone who actually knows things providing some information. It just seemed like the original comment didn't give enough weight to context.
*Women in SK are as I understand it fighting a whole other battle.
>But if you get caught stealing bread, and your response is "My life's screwed", you couldn't afford the risk either.
>If you are in the unfortunate position of not being able to afford bread, eat something less expensive and try to build savings so that some day your children can afford bread.
See how this works when you conveniently dismiss the effects of severe structural problems in society as evidence of poor financial literacy?
I recognize that there's something I'm severely misunderstanding here. In order to "win big" in the stock market, you generally need to invest big -- i would assume people investing big in the stock market aren't literally homeless; they likely rent some kind of room or apartment. Equivocating it to "stealing bread" seems a little extreme.
If the supply/demand curve of housing is so extremely upside-down that the only way to get ahead of it is gambling, then maybe they shouldn't be increasing the population -- at the risk of sounding a bit heartless, it seems to me like the only real choice is to leave; a peninsula that's locked from the mainland by an enemy like north Korea means that resources must be too scarce for their population.
It's all relative, you seem to think that rich people can't get "as depressed" as poor people but you are genuinely wrong, rich people also commit suicide, money isn't everything and for the most part, people have worked quite hard and smartly to become rich, such a basic take.
PS (ready for the downvotes): A ton of people are not wealthy by choice as well, I don't want to over generalize because this isn't true for all, but a LOT could master a new topic every month by just stopping Instagram for 1 hour a day and instead use that time to study and make money, so what, if they start in the direction of building wealth, suddenly they are assholes?
The notion that poor circumstances somehow justify poor choices is extremely counterproductive, as the context of this thread should make abundantly clear.
Just saying rich people betting and losing is much more funny than poor people making bad financial decision in the hope of maybe living a better life.
> Part of the problem was regulators’ decision in late May to approve 16 single-stock leveraged ETFs tracking Samsung and SK Hynix, which have been blamed for amplifying moves in indices and individual stocks.
Baffling that this was approved, though less so if you don't assume the regulator has the general market participant's interests in mind
Almost everything about society gets less baffling when you drop the assumption that power has any interest in wellbeing.
yes, baffling regulators would regulate the things that are irregular.
we watched them change the rules in the US to force indexers to provide exit liquidity for the spacex IPO blunder via your dad's 401k. capturing the regulators is just part of what finance does.
Who is we and them? 1 index chose to change the rules, Nasdaq 100, and it’s in less than 1% of retirement funds.
them is nasdaq and we is us. you know this, i can tell because you said it right after you asked me.
The point is "them" was just 1 entity, and the affected "we" is a very small portion of the population who knowingly gambled on a risky index.
So...nothing really happened.
> nearly half of its 880,000 clients who bought Samsung shares were now sitting on losses, while nearly 70 per cent of its 408,000 investors in SK Hynix were also in the red.
> Margin debt, which hit a record Won38.6tn ($27bn) last month as investors borrowed to amplify bets, has dropped to Won33.2tn after a wave of forced liquidations during the recent rout.
Looks like there is a lot of leverage left.
How tightly regulated is investment margin lending in the US?
You can get SPAN margin if you have enough money, margin is calculated dynamically based on implied volatility and other metrics. I’m not very familiar with how it works, I have a regular margin account.
Standard margin accounts allow 2x overnight leverage and 4x day trade leverage (must close below 2x leverage at market close)
https://archive.ph/WBSCj
- why is everyone suddenly selling
- what changed in the last week that did not change in the last 6 months?
Markets don’t always need an external change to drop. Sometimes it’s just part of the same price discovery process that ran the price up early on.
Price is the derivative of position changes - it reflects supply & demand in the market at that moment, which is often highest when everyone is entering the position.
When people are buying an asset speculatively, they often all enter the market at once, which drives up the price spectacularly. But then once they've all bought, what happens? That demand drops off; everyone who wants to own memory chip stocks already does. You're left with the value investors who already held and bought early, who see that their asset is now wildly overpriced and want to get rid of it. So the price then drops until that supply drops off and you reach a new equilibrium, often exacerbated by the speculators who see their position evaporate and want to get out.
> why is everyone suddenly selling
1. Korean equities have been undervalued in comparison to Asian peers for a couple decades.
2. A couple Asia targeted funds began hedging ASEAN, China, and India equity risk by purchasing discounted Korean equities around 18-24 months ago.
3. This influx of capital along with South Korea's lack of regulation around retail investing led to the KOSPI rally.
4. Now that experienced funds are rebalancing, many retail investors that participated in the rally with limited knowledge got caught with their shirts off.
> what changed in the last week that did not change in the last 6 months
Larger emerging market and Asia funds that began the KOSPI arbitrage have hit internal metrics like IRR in the 20% range and are now rebalancing.
There's a reason South Korea is still classified as an "emerging market" in most risk indices despite being a developed economy.
Gamblers shouldn't expect to win all the time.
Some seem to expect governments to save them, which worked in 2008.
Wasn't that the casino who were rescued.. anyway they were selling "bets" which they claimed were "safe'.
If 100 people play a parlor game which the ratings agency has given"80% chance of winning", and 70% lose money instead...
This article's comment section made me discover the hilarious "No crying in the casino" meme words, thanks.
>bursts
so it's bursting now?
Bursting??
They set off circuit breakers for KOSPI twice in two days.
No chart in the article, huh? Strange, that.
Kospi is up 72% year over year: https://www.google.com/finance/beta/quote/KOSPI:KRX?window=1...
It's up 30% year-to-date. It's even up 13% over the last six months.
The same is true for Samsung, except the numbers are even larger (in the green direction). Sure there must be people who screwed themselves in the short term, but this doesn't look like reasonably careful investors have anything to cry about as of right now.
[dead]
Hyped Korean techbros went from “Let’s gooo!” to “Aww nooooooo!” faster than a StarCraft 2 match
faster than a zergling early base rush.
Ah, the gentlemanly 6 pool <3
But seriously, betting on stocks is not an "investment". This is like the first thing you gotta learn in order to not get gently-caressed over by the market. My rule of thumb: if it's not insured somehow, its just speculation (which can be profitable, but never an "investment").
oh those poor rich people that lost a bet, I feel so sad for them :(
Small retail investors comprise 66% of the market in SK. It's usually single unmarried people who make ridiculously big bets to try and get enough money to buy a house or get married. It's something to be pitied not hated.
Okay yeah that's very sad. People being tricked / kind of forced to bet money they can't afford to lose is very shitty.
From my very shallow understanding of the Korean market it's common to invest in high risk shares because a big win is the only way to afford a nice home. Financial nihilism, risk appetite etc. So it's far from only rich people.
But if an investment doesn't pan out, and your response is "My life's screwed", you couldn't afford the investment either. "high risk" is right in the name -- the win isn't guaranteed.
If you are in the unfortunate position of not being able to afford a nice home, live somewhere less nice and try to build savings so that some day your children can afford a nice home.
Now I'm on very thin ice and just based on youtube videos so if someone from South Korea reads this feel free to correct me.
As I understand it the order of things for men* in SK is 1) housing 2) marriage 3) children
No housing means no wife means no children to afford a nicer home. So, they're incentivised to take big risks.
But I'm going to step out of this minefield now with the hope of someone who actually knows things providing some information. It just seemed like the original comment didn't give enough weight to context.
*Women in SK are as I understand it fighting a whole other battle.
That seems the same as anywhere else in the world where women have the option to be independent. It even applies for many other species.
>But if you get caught stealing bread, and your response is "My life's screwed", you couldn't afford the risk either.
>If you are in the unfortunate position of not being able to afford bread, eat something less expensive and try to build savings so that some day your children can afford bread.
See how this works when you conveniently dismiss the effects of severe structural problems in society as evidence of poor financial literacy?
I recognize that there's something I'm severely misunderstanding here. In order to "win big" in the stock market, you generally need to invest big -- i would assume people investing big in the stock market aren't literally homeless; they likely rent some kind of room or apartment. Equivocating it to "stealing bread" seems a little extreme.
If the supply/demand curve of housing is so extremely upside-down that the only way to get ahead of it is gambling, then maybe they shouldn't be increasing the population -- at the risk of sounding a bit heartless, it seems to me like the only real choice is to leave; a peninsula that's locked from the mainland by an enemy like north Korea means that resources must be too scarce for their population.
> invest in high risk shares because a big win is the only way to afford a nice home.
Here I was thinking The Squid Game was a work of fiction.
It's all relative, you seem to think that rich people can't get "as depressed" as poor people but you are genuinely wrong, rich people also commit suicide, money isn't everything and for the most part, people have worked quite hard and smartly to become rich, such a basic take.
PS (ready for the downvotes): A ton of people are not wealthy by choice as well, I don't want to over generalize because this isn't true for all, but a LOT could master a new topic every month by just stopping Instagram for 1 hour a day and instead use that time to study and make money, so what, if they start in the direction of building wealth, suddenly they are assholes?
These aren't rich people, this movement is almost entirely fueled by young people. Educate yourself more before thinking this is reddit.
Young people who can't afford the risk, and don't bother to understand that fact.
Well apparently they don't really have a choice and with this context it's less funny
> Well apparently they don't really have a choice
The notion that poor circumstances somehow justify poor choices is extremely counterproductive, as the context of this thread should make abundantly clear.
Just saying rich people betting and losing is much more funny than poor people making bad financial decision in the hope of maybe living a better life.
> they don’t really have a choice
This kind of discourse is so intellectually poor…
You know who is also poor?