"When you desperately want to buy, it's the peak"... Chairman Lee Chae-won discusses value investing principles and semiconductor outlook

A session was held to examine the principles investors should maintain amidst increasing market volatility and to provide outlooks for various industries. Lee Chae-won, Chairman of Life Asset Management, explained the differences between momentum investing and value investing based on his 39 years of investment experience and analyzed the psychological factors investors should be wary of.

"When you desperately want to buy, it's likely the peak; when you are afraid, it's likely the bottom"

Chairman Lee Chae-won largely categorized investment strategies into momentum investing and value investing. According to Lee's explanation in the video, momentum investing is performed by those with excellent intuition and insight, following a philosophy of responding to risks through stop-loss orders when stock prices fall. On the other hand, value investing is a method of exploiting the discrepancy between a company's intrinsic value and its stock price, characterized by treating a price drop as a buying opportunity if the company's value remains intact.

Lee explained human nature through a past investment case of Lotte Store (formerly Lotte Swing) in 1999. Mentioning his experience of purchasing the stock, which had a high real estate value relative to its market capitalization at the time, he shared the psychological confusion he experienced as the stock price fell from 100,000 won to 80,000 won and then 70,000 won. Lee stated that due to the desire to buy at an even lower price and the fear of further declines, he ultimately could not place additional buy orders in the 60,000 won range. Although the stock subsequently rose to 2.6 million won, he noted that he could not buy due to fear at that time, saying, "When you desperately want to buy a stock, it is highly likely to be the peak, and when you are so afraid that you want to throw away all your stocks, it is highly likely to be the bottom."

Neutral view on semiconductor market conditions and perspective on Samsung Electronics}

Regarding the semiconductor industry, he presented a neutral opinion based on data. Lee cited three indicators: DDR5 spot prices, AI selling prices, and the GPU rental index. According to the video description, he pointed out that while DDR5 prices rose significantly compared to last year, they are currently stalling, and AI selling prices are plummeting from the 1 dollar level to the 0.5 dollar level. Furthermore, regarding the GPU rental index, he expressed concern about the impact that costs incurred at high prices a year from now will have on profitability, noting that current prices reflect the costs invested when they were cheap in the past.

Regarding Samsung Electronics, he approached it from the perspective of a value investor. Lee mentioned that Samsung Electronics is an excellent value stock currently showing a low P/E (price-to-earnings) ratio and high dividend yield. However, he explained that according to the principle of value investing, where one reduces the weight as the stock price rises relative to its intrinsic value, he adjusts the weight as the stock price increases.

Opportunities for domestic companies due to falling exchange rates

As an investment opportunity outside of semiconductors, he pointed to domestic companies following exchange rate fluctuations. Lee mentioned the situation where the exchange rate has plummeted from the 1,560 won level to the 1,350 won level, stating that it is necessary to pay attention to domestic stocks that can benefit from a strong won (falling exchange rate). In particular, he analyzed that companies with a high proportion of raw material imports, such as the food and beverage industry, which generates operating profits but suffers due to foreign exchange losses, could face good opportunities.

Additionally, mentioning the flow of funds in the market, he explained that while total domestic dividends were 50 trillion won last year, they are expected to increase to a scale of 80 trillion to 100 trillion won this year, and liquidity is being supplied to the market due to dividend expansions and performance bonuses for Samsung Electronics and SK hynix. Lee expressed his view that he is watching where this money will flow in the future and expects the point at which the Korea market's premium discount is resolved.