Samsung Electronics' Third-Quarter Operating Profit Reaches 107 Trillion Won…How Interest Rates Work and Principles of Long-Term Investing

Samsung Electronics’ quarterly operating profit rose to 107 trillion won in the third quarter, following about 57 trillion to 59 trillion won in the first quarter and 89 trillion won in the second. One argument was that attention should be paid not so much to the slowdown in the rate of profit growth as to the rapid increase in the absolute scale of earnings. However, the share price fell about 1% on October 8, 2026, the day the results were announced.

The speaker projected that, assuming fourth-quarter operating profit of about 120 trillion won, full-year operating profit would reach 350 trillion to 380 trillion won, and could approach 400 trillion won if results improved further. If the same trend continued, operating profit of around 600 trillion won could be possible next year. This is a projection based on a simple extension of the earnings trend and should be distinguished from confirmed results.

The argument was that substantial cash generation broadens the company’s strategic options by allowing it to acquire or secure capabilities it lacks, including technology, talent and supply-chain resources. A calculation was also presented suggesting that if 50% of future free cash flow were allocated to shareholder returns, the dividend yield at the current share price could reach 6% to 8%. The argument was that if earnings growth and shareholder returns materialize, they could provide grounds for a re-rating.

Micron Technology shares rose about 4% in the previous session to close at $108. DA Davidson maintained its Buy rating and raised its price target from $2,100 to $3,000; the broadcast described it as the highest price target on Wall Street.

The report’s central point was not a substantial increase in its revenue forecast, but a higher valuation multiple. Its view was based on the assumptions that AI-driven memory shortages would persist through 2028 and that the share of revenue covered by long-term supply contracts could expand to 50%. On that basis, it argued that memory companies could command high multiples similar to Nvidia’s.

The forward price-to-earnings ratios cited on the broadcast were 5.2 times for Micron and about 4 times for Samsung Electronics and SK Hynix. Walmart, by contrast, was cited at about 33 times. The argument was that Samsung Electronics and SK Hynix could have room for a re-rating given their low multiples and the outlook for the memory market, though the price target and valuations are projections based on the report’s assumptions.

It was argued that technological progress lowers production costs and enables more people to access goods and services. Citing the examples of telephone and refrigerator prices falling over the past 100 years while hotel stays in New York and movie tickets became more expensive, the broadcast noted that the common assumption that the prices of all goods always rise does not hold.

The view presented was that if technological innovation lowers the prices of goods faster than wages rise, it can support household purchasing power and strengthen the sustainability of capitalism. AI, too, could become a technology that reduces costs for businesses and society, with its spread potentially easing inflationary pressures over the long term.

Lee Kwang-soo described an interest rate as the rate charged when borrowing or lending money, and distinguished market rates from the policy rate. Market rates are determined by supply and demand in markets such as the bond market, while the policy rate is set by the central bank. He explained that market rates can be likened to a thermometer showing current economic conditions, while the policy rate is like a thermostat used to adjust those conditions.

When Treasury yields rise, investors can earn higher returns from relatively safe bonds, potentially reducing demand for stocks. In addition, share prices represent the present value of the cash flows a company is expected to generate in the future. When the interest rate used as the discount rate rises, the present value of future earnings falls. The analysis was that these two channels can operate together to weigh on the stock market.

Higher interest rates also affect sectors requiring large investments, such as semiconductors and AI. When companies borrow to invest in equipment and technology, higher interest expenses can lead them to scale back investment plans. Lee said that this could make recent changes in Treasury yields more acutely felt by growth and technology stocks.

Bond prices and yields move in opposite directions. When a bond’s promised interest payments are fixed, a fall in its price raises the yield for a new buyer, while a price increase lowers the yield. Thus, if an increase in Treasury supply or a decline in demand pushes bond prices down, yields rise.

In the United States, larger fiscal deficits mean more government bond issuance and greater supply. Mandatory spending, such as Social Security and Medicare, is difficult to cut as the population ages, while defense spending is also hard to reduce substantially. Interest costs on government debt were identified as a recent factor driving deficits higher.

A vicious cycle could develop in which wider deficits increase Treasury issuance, while higher interest rates raise interest costs and further expand the deficit. In addition, when inflation rises, demand for long-term Treasuries paying fixed interest may weaken because their real returns fall. The outlook was that if increased supply and weaker demand coincide, Treasury prices could fall further and yields rise, delaying a recovery in the stock market.

When concerns about war-driven inflation intensify, investors may prefer real assets that can respond to rising prices over Treasuries that pay fixed returns. This can reduce demand for Treasuries, lower bond prices and put upward pressure on yields. The broadcast described inflation concerns stemming from war as one factor weakening demand for U.S. Treasuries.

Lee Kwang-soo argued that the fiscal and economic costs the United States could incur in a war with Iran may exceed its benefits. His long-term outlook was that, as deficits and interest costs accumulate, the U.S. government may find it difficult to sustain high interest rates and additional Treasury issuance, making it harder to prolong the war and potentially prompting it to move toward an end to the conflict. This was a forecast based on fiscal conditions, not a confirmed account of how the war would unfold.

One interpretation presented was that the expansion of U.S. tariffs is intended to make up for revenue lost through corporate tax cuts. Data compared on the broadcast showed that the reduction in corporate tax revenue and tariff revenue were similar in scale.

Lee Kwang-soo argued that raising corporate taxes could be a simpler way to secure stable government revenue than relying on tariffs. He projected that U.S. corporate taxes could rise after a change in administration, and that an actual increase could cause volatility in the U.S. stock market.

Advance applications for support with young people’s first National Pension premium opened on October 1, and the broadcast reported that 92 applications had been received at the time. The program covers one month of premiums at the minimum standard monthly income amount, helping people aged 18 or older start their contribution period earlier. The aim is to help them extend the period during which they contribute to the pension.

Applicants were described as young people aged 18 up to but not including 26. It was also noted that parents could help submit an application on their behalf. Applicants must complete the application process to receive support.

In response to the view that support limited to young people was unfair, one opinion was that a new program should first be established before support is extended to other age groups. Other issues raised for future consideration included whether it was appropriate to provide benefits only to those who apply and why welfare support should require an application in the first place.

Lee Kwang-soo defined investment risk not simply as loss but as uncertainty. He explained, citing a chart showing the probability of losses over different investment periods in the S&P 500, that extending the investment horizon can help reduce the risk of loss while pursuing higher returns and limiting uncertainty. He stressed that long-term investing does not mean holding a particular stock unconditionally for a long time, but staying in the market over the long term.

He also emphasized the need to avoid large losses in order to benefit from compounding. For example, an investment of 10 million won earning 10% annually could grow by more than 60% relative to the original amount after five years, but a 50% loss in the sixth year could significantly erode the gains accumulated up to that point. Investors, he argued, should decide before buying how much of a loss they can tolerate and plan how to respond to a decline.

Investment records should include the reason for buying, the loss an investor can tolerate, assessments of share-price movements while holding the stock, and the reason for selling. Citing a hypothetical example of buying 10 shares of Samsung Electronics at 276,000 won on October 2, 2026, he explained that recording one’s own rationale—such as rising semiconductor prices, improving earnings or relative undervaluation—would make it possible to review past decisions. The point was that documenting unclear reasons for buying or selling, such as a friend’s recommendation, can help identify problems in the investment process.

Quoting Warren Buffett’s remark that “investing is a no-called-strike game,” he advocated waiting for opportunities one understands rather than rushing into every opportunity, while remaining in the market. The argument was that investors should manage their plans and execution rather than fixating on outcomes, and repeat proven principles rather than continually search for new investment strategies. He added that long-term outlooks should begin not with attempts to predict short-term share prices, but with identifying durable trends and predictable changes, much as winter eventually gives way to spring.