South Korean Stockpocalypse and Wall Street's Schizophrenic Calm

The Great Korean Stockpocalypse

As Assistant Regional Manager (in training) I Dwight K. Schrute take market volatility very seriously. This week South Korea's KOSPI Index experienced a bloodbath. A 12% drop in a single day. That's more devastating than a beet blight on Schrute Farms. These are the times that try men's souls and separate the wheat from the chaff. The Korean market heavily reliant on Middle Eastern fossil fuels buckled faster than Michael Scott under pressure. As Sun Tzu said "The line between disorder and order lies in logistics." And their logistics are clearly compromised. This is not amateur hour people.

Wall Street's Unbothered Zen

Meanwhile Wall Street is acting like nothing happened. Jay Woods from Freedom Capital Markets says "It's all about perspective." Perspective? Is that what you tell the beet farmer when his entire crop is infested with weevils? No. You take action. You protect your investment. These so called experts claim the U.S. market is too diversified to suffer the same fate. But remember complacency breeds failure. It is critical to analyze Global Gas Prices Soar Amid Middle East Tensions: A Pirate's Perspective in order to understand all the underlying factors. It is like identifying where the bears are located. Knowing this we can do something.

Concentration: The Silent Killer

Larry Tentarelli points out that Samsung Electronics and SK Hynix comprise over a third of the Korean index. That's like having your entire farm depend on a single beet variety. Foolish. The S & P 500's top two stocks Nvidia and Apple only account for 14%. This lack of diversification made Korea vulnerable. This is like neglecting your personal hygiene. Eventually it will catch up with you.

Retail Investor Panic: Exit Stage Left

Viraj Patel notes that the iShares MSCI South Korea ETF (EWY) went from a "retail darling to retail investors rushing for the exits." These are the same people who buy lottery tickets and think they'll win big. Investing requires discipline patience and a healthy dose of skepticism. And beets. Never forget the beets.

The Perils of Leverage: Debt is the Devil

Korean investors piled into leveraged trades betting on the market. This is akin to taking out a second mortgage on your farm to buy more fertilizer. If the crop fails you're ruined. Leverage amplifies both gains and losses and in this case it amplified the losses exponentially. "Whenever I'm about to do something I think 'Would an idiot do that?' And if they would I do not do that thing."

The Schrute Survival Strategy

So what can we learn from this Korean catastrophe? Diversify your investments. Avoid excessive leverage. And always always trust your gut especially if your gut tells you to invest in beets. As I always say "People underestimate the power of beets." And also "Identity theft is not a joke Jim. Millions of families suffer every year." This translates into "market manipulation is not a joke" and the effect is similar. Now if you'll excuse me I have beets to harvest.