[Kwangsoo's Take] Review Cash Reserves and Investment Principles Even Amid Fear
Lee Kwang-soo stressed that in a market plunge, the first thing to assess is not only the scale of the decline but also the conditions for a recovery. Past periods in which markets fell sharply over two days and then recovered slowly were concentrated around crises that shook the financial system itself, such as the IMF financial crisis, the subprime crisis and the collapse of the dot-com bubble. Since this plunge reflects overlapping concerns about data center investment and the election results, he argued that investors should assess the actual impact of the news rather than immediately equating it with those crises.
Lee Kwang-soo explained that lower-end KOSPI forecasts issued by domestic securities firms reflected a price-to-book ratio (PBR) of around 1. He cited estimates that put the range at roughly 4,800 to 5,500, while cautioning that this did not mean those levels were an absolute floor. Share prices move significantly not only with corporate earnings but also with the valuation multiples assigned by the market, and when those multiples shift sharply, as they are now, both declines and rebounds can be amplified.
Lee Kwang-soo said that investors could choose to trim some holdings to secure cash, but that being unable to sell stocks was different from deciding not to sell according to a plan. Investors should establish principles suited to their loss tolerance and funding needs, he said, distinguishing between exiting the market entirely out of fear and deliberately adjusting portfolio exposure. Rather than making categorical predictions about the market's future, he added, investors should monitor interest rates, foreign selling and changes in AI investment plans.