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- Hacker News
- Especially in Korea, I know there's a sense of despair in the young adult population on their future. How will they afford to get married, have kids, have a house? Leads to chasing financial outcomes that are uncertain - crypto boom in Korea years back is an exampleby djchung
- Are other countries like the West where 'markets' (equities, derivatives, prediction) have a wide ranging pervasive effect on culture?
- Do you consider South Korea the "West"?by xyzzy9563
- Korea. A lot of people have been gambling on margin.by vkou
- The Indian derivatives market is huge. Lots of people gambling there.
- Around the Evergrande collapse there were stories about Chinese retail investors who had pushed money into their domestic real estate industry’s stocks.
Also you might painting too wide a brush with “the West”. I wouldn’t assume that Americans and, say, Austrians have similar exposure to public markets.
by dcrazy - The headline is brilliant.by FabHK
- If you are in a hole, dig deeper.by bwfan123
- I would be really interested to learn what the default advice for retail investors is across countries.
In Germany the consensus is MSCI World or FTSE All-World ETFs.
I believe in the US most advice goes to VTSAX (US Total Market), VOO (S&P500) and maybe QQQ (NASDAQ100) which means only US stocks.
What gets recommended in other countries?
by oezi - Disagree on that being the advice in the US. Most basic investment advice (and target-date funds) will use a three-fund portfolio containing US, ex-US, and bonds.by rafram
- Italy - vwce or any all world
This of course if you're doing by yourself, banks definitely won't recommend that but some other bullshit fund with high costs and poor performances
by amarcheschi - Generally the default fund in a decent 401(k) (employer managed but largely employee funded retirement plan) will be a "target date retirement fund" that contains a mix of equities and bonds according to the expected risk tolerance of someone at that age, and generally the equity component is also split between US and foreign equities.
e.g. Fidelity's fund for people planning to retire around 2050 https://fundresearch.fidelity.com/mutual-funds/summary/31579...
by khuey - It’s just gambling, not investing.
- Not the first time, not the last either. https://www.pbs.org/wgbh/pages/frontline/creditcards/themes/... https://www.bis.org/publ/bppdf/bispap46k.pdf South Korean gamblers are the index species of any global credit bubble.by mapping365
- It may be true but if you have nothing else going for you I can see why some folks would throw their leveraged hat in the ring.by appplication
- For a second, it appeared some found out.
https://www.reutersconnect.com/item/south-korean-retail-inve...
But it seems there's still a lot in their FA phase in the FAFO cycle.
by chanux - The problem isn't leveraged funds, it's margin on leveraged funds.
Leveraged funds are the safest way for the average investor to get access to leverage because unlike margin there is no risk of margin calls, and your money generally won't go to zero unlike options which are vastly more complicated and can expire.
The reality is that using leveraged funds (or any leverage) is a completely rational move because the average person will never retire wealthy unless they're already making a tech salary or similar.
Investing has always been gambling, even Warren Buffet made his biggest early wins on all-in bets.
by mkotlikov - If you invest only $200 a month in the S&P 500 from the age of 18 to 65 you'll end up retiring a multi-millionaire. It doesn't take a lot but people are either unaware of how it works or not disciplined enough to put aside $200 a month. Considering that on average Americans are spending $150+ a month on subscription services and $300+ eating out there's plenty of room in the budget for investing $200 a month.by phyzix5761
- Leveraged funds can be an excellent tool for portfolio construction, for example, products like 100% stocks + 100% bonds (so -100% cash; internally borrowed in the ETF), e.g. RSSB.
And just because it's available doesn't mean it should be your only ETF/ETP. Not a recommendation or advice, but something like 50% TQQQ, and 50% risk-off asset (gold, bonds, whatever); rebalanced regularly isn't crazy, and might even have alpha.
by dannyw - > Leveraged funds are the safest way for the average investor to get access to leverage
I... do not agree that leveraged funds are somehow a safest way to access leverage.
Every product including leverage has inherently a non-linear P&L. And from my experience, non sophisticated investors always struggle to grasp the implications of that. It makes returns (on capital) very path dependent, and very nasty during volatile regimes. It breaks the naive assumption of "well I could always hold and wait for the dust to settle".
> unlike margin there is no risk of margin calls
This is a bit of a weird statement. Leverage implies margin, you cannot make it disappear, the funding and associated risk has to come from somewhere, it's just that it is continuously applied, instead of fixed timings.
I do agree that it simplifies planning and reserve management though.
> even Warren Buffet made his biggest early wins on all-in bets.
This is a bit disingenious, note that Buffet did not use leverage...
by Galanwe - "Smart men go broke three ways: liquor, ladies, and leverage." -- Charlie Munger
(Which is not to imply that these are smart men).
by bananamogul - Some time ago it occurred to me that you can't just spend extreme amounts of money. You can only lose it by gambling. In a casino, on investment or on business, it doesn't matter.by scotty79
- As a Korean, the reason people rush into stocks is simple: labor value has been completely destroyed.
Realistically, it's nearly impossible for high income young people in their 20s and 30s to buy a house in Seoul. That forces them to move to the provinces, but then there's almost no infrastructure. No companies either.
So many people turn to leverage in hopes of a life changing reversal.
The recent rise in the KOSPI index happened because some of the loopholes that Korean conglomerates used to make inheritance easier were blocked by revisions to the Commercial Act. One of the uncertainties that had been called 'Korean risk' was removed, and the market went up.
For a Korean man, the moment you leave Seoul, not just the outskirts, but out of Seoul entirely, there's no one to talk to about IT jobs. I live outside Seoul, and the infrastructure gap is about 10 to 20 years behind. On top of that, there are no IT companies, just mostly low income manual labor jobs.
The median monthly income for Korean men is about 3 million KRW, while the average Seoul apartment price is 1.3 billion KRW and the median price is 997 million KRW. That means you'd need to work for about 25~30 years just to buy a home, but job tenure is getting shorter, so that's not realistic.
So people gamble on leverage, hoping for a life changing win. Everyone around me knows it's gambling, but they figure they're already in a dead end situation anyway, so they have nothing to lose.
I live and work in IT outside Seoul, but the IT business has already matured, and there are many well established companies. The Korean market itself is small, so early movers have already taken the lead. There's no room for latecomers like me. That's why I take on work from the West, China, and Japan regardless, but even that's hard without a reputation.
The moment you leave Seoul, a Korean's chances of success drop to nearly zero. That's why people cling to the city so desperately.
And honestly, I've hardly gambled on my life. But I'm drowning in debt, and sometimes I feel like a fool for working so hard.
by jdw64 - Can people live cheaply in the outskirts and work remotely for a foreign company? Or would that still not get you on track to be able to buy in/near Seoul?by apparent
- > I live outside Seoul, and the infrastructure gap is about 10 to 20 years behind
That actually sounds like a business opportunity, if there is a steady stream of people moving out if Seoul.
> On top of that, there are no IT companies
Why don't Korean companies embrace WFH? Again sounds like a huge competitive advantage on the job market
by usrnm - The story we were telling young people that if they apply themselves, go to school and get a job they'll be able to afford family, house, vacations is moving further and further away for more and more people.
The turn towards financial nihilism will continue.
by raziel2701 - We live in a capitalist society, not a labor-oriented society. The way to make big money is through capital - ie: purchasing property and then selling it for (hopefully) profit.
Laboring in a capitalist economy is a loser's strategy because your capital is you body's ability to produce value and that has a maximum physical limit. Why participate in an economy using a strategy that has a natural upper bound? It makes no sense. You're not even playing the game poorly - you're not playing the game at all.
by kelseyfrog - While "financial nihilism" is part of it, I think we should be putting even more attention towards the forces that are trying to deliberately encourage it for profit.
Kind of like pathological gambling: Sure, some people are susceptible, but there's also an entire industry around finding them and making them succumb.
by Terr_ - Yeah, but it’s also plain greed, and it’d be hard to tell the ratio.by trvz
- This doesn't make any sense. The population has experienced massive uplift over the last few decades. Their parents weren't going on vacations with the family as kids, they were struggling to put food on the table. Houses are outpacing inflation, but the home ownership rate continues to climb.