Brief Summary
This video features an interview with investment expert Oh Gun-young, who shares his insights on various economic and investment topics. He discusses strategies for using debt wisely during inflation, promising industries in the current economic climate, common investment pitfalls, and the potential impact of the US economy on personal finances. He also touches on interest rates, currency exchange, portfolio management, and investment opportunities in stocks, bonds and gold.
- Using debt as a strategic tool during inflation, but warns against excessive borrowing, especially for beginners.
- Diversifying investments across different asset classes and geographical regions to mitigate risk.
- Understanding the importance of continuous learning and adapting to market changes.
Subscriber Greetings
The host, Han Suk-joon, introduces Oh Gun-young, a macroeconomics expert from Shinhan Premier Pathfinder, for a discussion on essential financial knowledge. This is Oh's second appearance on the show, following a highly successful previous episode that garnered significant views. The focus will be on fundamental investment principles rather than specific stock recommendations.
Using Debt as an Asset During Inflation
Oh discusses the concept of using debt strategically, particularly during inflation. Inflation erodes the value of currency, which reduces the real burden of debt. He uses the example of buying a house with a mortgage, where the debt becomes less significant as the property value increases. However, he cautions beginners against taking on debt for investments, as market downturns can amplify losses. For experienced investors, he suggests using debt cautiously for essential assets like housing, but emphasises the importance of understanding the risks involved.
Most Promising Industries in an Inflationary Era
Oh suggests looking at the 1970s in the US as a reference point for investment strategies during inflation. During that time, high inflation and slow economic growth made it difficult for companies to increase revenue while costs were rising, which negatively impacted the stock market. High inflation also led to high interest rates, making bonds less attractive. The best-performing assets were commodities like oil and gold. He advises diversifying portfolios to include commodities and gold as a hedge against inflation, but cautions against over-investing in alternative assets at the expense of traditional investments like stocks and bonds.
Two Common Pitfalls for Novice Investors
Oh identifies two common mistakes made by novice investors: investing based on the advice of friends and not knowing what to do after making profit. He stresses that those who make profit should consider it as seed money and study more about the market. He highlights the dangers of herd mentality and leverage, which can lead to significant losses when market conditions change. He recommends diversification and continuous learning to navigate market fluctuations.
Impact of the US Crisis on Korean Finances
Oh explains why the Korean economy is heavily influenced by the US economy. The US has a more stable economy due to its strong consumer spending, while Korea relies heavily on exports, making it vulnerable to fluctuations in global demand. He notes that while the connection to the Chinese economy once lessened the impact of the US on Korea, Korea is now experiencing a trade deficit with China and a trade surplus with the US, increasing Korea's reliance on the US economy.
Why the US Continues to Lower Interest Rates Despite High Inflation
Oh discusses the conflicting views on interest rates in the US, with the Federal Reserve (the Fed) concerned about inflation and others, like Trump, advocating for lower rates to stimulate economic growth. The Fed is hesitant to lower interest rates because inflation is above their target level, while Trump argues that current inflation is temporary due to tariffs. The Fed has begun to lower interest rates, signalling a shift towards prioritising economic growth.
Three Reasons for the Fluctuating Korean Exchange Rate
Oh explains why the Korean Won is weak compared to other currencies, despite the US Dollar also being weak against the Euro. The reasons are: the strength of the dollar, the weakness of the Japanese Yen (due to Japan's economic policies), and the uncertainty surrounding the Korea-US trade agreement. He notes that a weaker currency can negatively impact Korea's export competitiveness.
Portfolio Check-Up Before an Economic Crisis
Oh advises against excessive pessimism during economic uncertainty. He suggests maintaining a balanced portfolio and diversifying investments to mitigate risk. He emphasises the importance of continuous learning and adapting to market changes.
The Stock Investment Boom in Korea in 2025
Oh compares the current stock market enthusiasm to the "Donghak Ant Movement" during the COVID-19 pandemic. He notes that while there are similarities in the level of interest, there are also key differences. The COVID-19 pandemic was followed by a large influx of money into the market, while the market is now more stable. He also notes that investors are now more experienced and knowledgeable than they were during the pandemic.
Are Bonds Always a Good Investment When Interest Rates Are Low?
Oh explains the inverse relationship between interest rates and bond prices, and discusses whether it is wise to invest in bonds when interest rates are expected to decline. He uses the analogy of a fixed-rate bank deposit to explain how bond prices are affected by changes in market interest rates. He cautions that the expected interest rate cut may already be factored into bond prices, and that the Korean interest rates may not follow the US interest rates.
Beginner's Guide to Bond Investing
Oh advises beginner bond investors to consider the investment timeline. He explains that bonds can be safe assets if held until maturity, but their prices can fluctuate significantly if sold before maturity. He recommends shorter-term bonds for beginners and cautions against investing in very long-term bonds, as they can be highly sensitive to interest rate changes.
How to Invest 10 Million Won
Oh recommends that novice investors allocate a hypothetical 10 million won across a diverse range of Exchange Traded Funds (ETFs). He compares this approach to a football coach assembling a national team, where the coach must evaluate players in different positions and under various game conditions. He suggests diversifying across asset classes (stocks, bonds, alternative assets), geographical regions (domestic, US, Europe), and currencies (Won, Dollar). He also recommends experiencing both growth and value stocks to understand their behaviour in different market conditions.
Everything Rally: Stocks, Bonds, Gold... All Assets Are Rising
Oh explains the phenomenon of an "everything rally," where all asset classes are rising simultaneously. This is due to a large amount of money flowing into investment assets, often fuelled by leverage. He cautions that such rallies are unsustainable and that investors should be wary of excessive optimism and leverage. He advises investors to be cautious of investments that are too popular or have risen too quickly.
Gold Price Surge: 800,000 Won per Don?
Oh discusses the reasons behind the unprecedented surge in gold prices. Gold is a physical currency and a hedge against inflation. He explains that gold prices tend to increase when real interest rates (nominal interest rates minus inflation) are low or negative. He notes that while gold prices have risen significantly over the long term, there have also been periods of sharp declines.
Update on Gold Prices Reaching All-Time Highs
Oh provides an update on the recent fluctuations in gold prices. He notes that while gold prices have recently fallen, this is likely due to short-term overbought conditions. He reiterates his view that gold should be considered as a portfolio diversifier, especially in light of potential future events that could devalue paper currencies.
