At the close of each year, I am accustomed to composing a reflection on the preceding twelve months and articulating a strategic plan for the year ahead (though execution remains a separate matter). However, an unanticipated departure at the end of last year resulted in my welcoming the New Year abroad.
Occupied by the pursuit of fine dining and various professional obligations—as this was not a purely recreational endeavor—I lacked the leisure to write, balancing moderate labor with periods of respite. The demands on my energy were unexpectedly substantial.
During my time abroad, I mentally cataloged various themes and plans; however, it is only now, nearly two weeks after my return to Korea, that I find the capacity to commit these thoughts to writing. The transition between years proved more taxing than anticipated.
I shall begin by auditing my projections for 2019.
To provide the conclusion at the outset for the sake of brevity: Every projection was validated..
Validation of 2019 Outlook (Based on Closing Prices on Jan 2, 2019)
Year-End Review and 2019 Outlook (2018.11.28.)
Stock Market Outlook (2019)
Bull markets are born on pessimism,
grow on skepticism,
mature on optimism,
and die on euphoria.The time of maximum pessimism is the best time to buy,
and the time of maximum optimism is the best time to sell.― Sir John Templeton
If you judge only from news headlines, the stock market appears to be in a state of near-panic selling. From a fundamental perspective, an entry point is gradually manifesting …
For a value investor, the current climate presents an exceptional occasion to accumulate equities of high quality stocks at demonstrably depressed valuations. It is definitely one of the rare, significant valuation dislocations in recent cycles.
First Time Accessing My HTS in Almost a Year (2018.12.31.)
Whether it is a result of an optical illusion or market reality, I cannot say much from a short-term trading perspective, but for medium- to long-term investing, there seem to be a huge number of stocks to buy.
While the axiom that “those destined to rise will eventually prevail” holds true for both trading and investment, the current market appears treacherous for those seeking immediate returns.
It is intriguing to observe that large-cap stocks have undergone significant price compression. Simply establishing a position in blue chips—such as Samsung Electronics or SK Hynix—and maintaining a passive stance seems to be a sufficient strategy.
Stock Market Outlook Verification (2019)
Samsung Electronics: +61.03%
SK Hynix: +64.85%
A simple, passive 50/50 allocation between Samsung Electronics and SK Hynix would have yielded a return of +62.94%.
Due to frequent requests on this blog for stock recommendations, I seriously contemplated establishing a formal investment advisory practice in early 2019.
Market Commentary: Stock Picks for a Value-Driven and Defensive Market (2019.01.02.)
My investment methodology has long since transitioned away from intraday trading. The prevailing market environment appears far more conducive to fundamental value investing than to short-term speculative maneuvers.
I strongly advise against maintaining concentrated exposure for those unequipped for active intraday trading. For those unable to execute a disciplined -1% exit manually, I recommend setting stop-loss orders in advance.
Unless you have a rigorous background in technical analysis, or have traded derivatives long enough to stay emotionally steady while trading in a volatile market, I recommend prioritizing large-cap blue chips.
For those seeking capital preservation amidst uncertainty, then buy high-dividend defensive stocks and just sit on them… Or at least buy an ETF…
While not published on the blog, I advised close associates from late June to liquidate equity holdings and reallocate capital into inverse instruments, put options, and/or sovereign debt.
A Macro Call Realized: KOSPI Declines to Test the Low 1900s (2019.08.06.)
Conversation with my friend after the market close on 2019.08.05.
[5:19 PM]
Friend: Heading to the airport, for fuck’s sake.
Friend: Let’s talk when I get back.[5:19 PM]
Me: lolllll safe travels, bro[5:20 PM]
Me: I’m loving this clean drop in stocks lol. Have a comfortable trip.[5:21 PM]
Friend: lol okay then[5:21 PM]
Me: The door just opened for the KOSPI to test the low 1900s today lol
Me: See you when you get back[5:33 PM]
Friend: Alright, alright
Even without such long-short strategies, a straightforward “buy and hold” of the KOSPI Leverage ETF would have yielded +39.2%.
Real Estate Outlook (2019)
In my limited view, the real estate market next year will see Seoul rise further while regional markets are hit hard, and the polarization of wealth will become more extreme.
As capital is increasingly flowing into real estate funds and public real estate funds are expanding (at present, private funds account for 97% of the market), I recommend overseas exposure through REITs or real estate funds if one lacks the capital to acquire another property in Seoul.
While the merits of owning property in Gangnam are self-evident, I proposed overseas investment via REITs or real estate funds as a pragmatically accessible alternative.
Real Estate Outlook Verification (2019)
TIGER US MSCI REITs: +27.87%
Simply allocating to US REITs would have generated a (pre-tax) return of +27.87%.
Senior Secretary for Social Affairs Kim Su-hyun: “We will provide an opportunity to sell homes until next April” (2017.08.03.)
Minister of Land, Infrastructure and Transport Kim Hyun-mee: “Owners of multiple homes will face discomfort… sell if it is not your primary residence” (2017.08.04.)
Next, let us examine Korean house prices—a market where the Moon administration vowed to “curtail rising prices” and where I projected that “Seoul will advance while the provinces will collapse.”
Remarkably, “집값 잡겠다(Will bring house prices under control)” has even become a Google autocomplete suggestion.
The administration did indeed “catch” house prices, just as it had promised. As the national average recorded a YoY decline of -1.42%.
However, given that Seoul rose by +1.11%, Gangnam by +1.53%, and the Southeast Seoul region (Gangnam 3-gu) by +1.95%,
while provincial markets fell by -2.73%,
it is fair to say that they devastated house prices everywhere outside Seoul and Gangnam.
For reference, the benchmark for these indices is November 2017. Comparing current figures to two years ago rather than one:
Seoul +10.1%, Metropolitan Area +3.8%, Gangnam +11.9%, Southeast Seoul (Gangnam 3-gu) +14.0%
Provinces -5.8%
It is fair to say that they indeed devastated house prices nationwide outside the Seoul metropolitan area and Gangnam—especially the Gangnam 3 districts.
| Gangnam Real Estate Holdings of Senior Government Officials | Gangnam Real Estate Holdings of Presidential Office Officials | ||
|---|---|---|---|
| Senior Official | Apartment | Presidential Official | Apartment |
| Kim Dong-yeon, Deputy PM for Economic Affairs | Dogok-dong, Gangnam-gu: Dogok Rexle | Cho Kuk, Senior Secretary for Civil Affairs | Bangbae-dong, Seocho-gu: Samick Apt |
| Kim Sang-gon, Deputy PM for Social Affairs | Daechi-dong, Gangnam-gu: Raemian Daechi Palace | Kim Su-hyun, Senior Secretary for Social Affairs | Gwacheon, Gyeonggi-do: Jugong 6th Complex |
| Kim Sang-jo, Chairman of the Fair Trade Commission | Cheongdam-dong, Gangnam-gu: Opera House 2nd | Jang Ha-sung, Chief of Staff for Policy | Jamsil-dong, Songpa-gu: Asia Seonsuchon |
| Lee Hyo-seong, Chairman of the KCC | Gaepo-dong, Gangnam-gu: Gaepo Jugong 1st Complex | Joo Young-hoon, Presidential Security Chief | Banpo-dong, Seocho-gu: Banpo Xi |
| Paik Un-gyu, Minister of Trade, Industry and Energy | Daechi-dong, Gangnam-gu: Gaepo Woosung 2nd | Kim Hyun-chul, Presidential Economic Advisor | Daechi-dong, Gangnam-gu: Samsung Apt |
| Choi Jong-ku, Chairman of the FSC | Jamsil-dong, Songpa-gu: Jamsil Els | Park Hyoung-chul, Secretary for Anti-Corruption | Jamsil-dong, Songpa-gu: Galleria Palace Jamwon-dong, Seocho-gu: Shinbanpo 2nd (Partial interest) |
| Ko Hyoung-kwon, 1st Vice Minister of Economy and Finance | Cheongdam-dong, Gangnam-gu: New Hyundai Riverville | Shin Ji-yeon, Secretary for Foreign Press | Seocho-dong, Seocho-gu: Yuwon Apt |
| Son Byeong-seok, 1st Vice Minister of Land, Infrastructure and Transport | Bangbae-dong, Seocho-gu: Samick Apt | Yoon Seong-won, Secretary for Urban Housing | Nonhyeon-dong, Seocho-gu: Gyeongnam Nonhyeon Apt |
| Cho Yong-woo, Secretary for State Records | Gaepo-dong, Gangnam-gu: Hyundai 1st | ||
| Cho Han-ki, Secretary for Protocol | Jamsil-dong, Songpa-gu: Jamsil Els | ||
“At this moment, my heart burns with the fervor to build a nation unlike any we have known before."
President Moon Jae-in’s inaugural address (May 2017)
Mr. Moon’s heart was also burning with enthusiasm—as scorching as the heat of Hell Joseon itself…
“The administration of state affairs permits no margin for failure or trial and error. It is not an endeavor accomplished through mere benevolence or will; one must possess a fundamental grasp of the administrative architecture and its underlying operational mechanisms."
TV debate on unifying the presidential candidacy (2016)
Without missing a beat, he managed to drive up national land prices by KRW 2,000 trillion (i.e., USD 1.68 trillion) in just two years…