Difficulty in Investing in Individual Stocks

As Corona 19 led to a ‘stay at home’ life, many people became interested in stock investing. It was difficult to attend sports events, concerts were canceled, it was difficult to go to gambling places, and it was difficult to travel.

Along with the stock craze, there was constant news that he made a lot of money in an instant by investing in Tesla, GameStop, etc. as well as ARK Invest. As the saying goes, ‘How hungry is it when your cousin buys land’? After hearing the saga about making money by investing in stocks, I think that only I am missing out on a chance to hit the jackpot, so I decide to invest in stocks. And the first difficulty is which stock to invest in.

Most of the time, stock selection is decided by asking relatives and diligently searching the Internet. Most stocks are a hot topic these days and invest in companies that appear frequently in the media. In a rising stock market, investment money increases no matter where you invest, but investors do not realize how difficult it is to select and invest in a specific company in a few stocks and the fact that it is highly likely to lead to a failed investment.

Shares of Metaplatform, the parent company of the world’s largest social media Facebook, fell 26.39%, the largest ever. In terms of market capitalization, a whopping 300 trillion won disappeared. It accounts for nearly 75% of Samsung Electronics’ market cap. Imagine that Samsung, Korea’s leading company, has only 25% left overnight. Ark Innovation is down 50% from its peak. Shares of exercise equipment maker Peloton, which was at its peak due to the coronavirus, rose to $170 and then plummeted to $25. Netflix stock is also down 30% this year alone and is down 50% from its highs.

Investing in the US or Korea is an investment in Tesla stock. As it is at the forefront of the electric vehicle industry, it is receiving all kinds of attention. But no one knows how a company will change over time. There were about 3,000 automakers in the 1920s, but only Ford, GM and Chrysler remain today. Investors should remember that electric vehicle production is currently the focus of all automakers around the world.

Cryptocurrency, an investment don’t ask, is similar. The rosy hope (Super Bowl 2022 Commercials) not to be left behind in the coming new innovations and digital technologies in the future is further encouraged. Technological innovation can be expected, but that doesn’t mean everyone gets a jackpot with coin investment. Currently, there are more than 10,000 types of cryptocurrencies alone. Both of you went west to mine for Gold Rush, but let’s not forget that the people who actually made the money were the people who sold the tools to mine the gold and the pubs.

If you invest in a stock made up of the 500 largest companies in the United States without expecting a jackpot, you can receive a high return of 27.9% in 2021, 18.4% in 2020, and 31.5% in 2019 investment. The average annual average for the past 13 years is 16.03%. This is an incredible return on a $100,000 investment that has grown to nearly $700,000. While we cannot accurately predict future stock market returns, our long history gives us a baseline.

Who can be called a stock expert? It is difficult to say that relatives who recommend investment stocks around us and made money from investment are stock experts. People who can be said to be stock experts can be said to be mutual fund managers who collect investment money from ordinary investors and invest in promising companies. A fund manager wants to invest in a company that is good for eating and doing well. It has much more favorable conditions than stock information, funds that can be invested, or general investors. However, the fact is that 85% of even these investment experts are below the average return on the stock market.

There are a lot of people who want to tell you the secrets of stocks. There are also a number of social media platforms such as YouTube that pick stocks to hit. The financial industry is also eager to encourage anyone to invest. Stock information abounds. When my relatives and friends meet here these days, they only talk about investing in stocks. However, investors should not forget the fact that there is a very high probability that investment based on the floating stock information and crowd psychology will fail.


Myung-Duk Lee, Ph.D., Registered Investment Adviser (RIA)

Copyrighted, Dr. Myung-Duk Lee’s Financial Column All rights reserved.

MI Asian Staff
Author: MI Asian Staff