I recently came across an interview featuring the investment philosophy of macroeconomic expert Oh Geon-young. His insights go beyond simple investment techniques, demanding a fundamental shift in how we think about investing. His investment philosophy, explained through childhood fishing experiences, precisely identifies the real problems that many individual investors face today.
Individual Investors Chasing Fish with Nets
The childhood story shared by Oh Geon-young perfectly captures the current state of the investment market. The image of a child running around in water with a net, chasing fast-moving fish, bears a striking resemblance to individual investors chasing hot stocks based on news headlines.
The behavior of "following the news - this is good, Japan is good, energy is good" and chasing market trends is essentially the same as chasing fish with a net. The problem is that the current market moves more than three times faster than it did 20 years ago. With YouTube, AI algorithms, and global investor participation, the speed of information dissemination and market reaction has dramatically accelerated, making it nearly impossible for individuals to keep up.
The Fish Tank Strategy: Diversification and Long-term Perspective
So what's the alternative? Oh Geon-young's solution is the "fish tank strategy." Instead of chasing fast fish, you set up multiple fish tanks in different locations and wait for the fish to come to you. In investment terms, this means diversification and taking a long-term perspective.
He particularly emphasized diversified investing through ETFs (Exchange-Traded Funds), which is very practical advice. While it's difficult for individual investors to analyze and invest in multiple stocks directly, a single ETF already provides diversified exposure to multiple stocks. By combining several ETFs with different characteristics, you can achieve a "super-diversification" effect.
Practical Advice for Investment Beginners
For those just starting to invest, the most important thing is "getting comfortable with investing." This goes beyond simply accumulating investment knowledge - it means actually investing small amounts and experiencing market movements firsthand.
He recommends starting with small amounts of 10,000 to 50,000 won (roughly $7-35) across various ETFs, observing their daily movements, and keeping an investment journal. Even if you experience a 30% loss, think of it as about 15,000 won ($10) in "tuition fees" - a refreshingly realistic approach.
An important point here is that earning 3,000 won in profit is actually more dangerous than losing 3,000 won. Small gains often lead to overconfidence, causing people to invest larger amounts and suffer bigger losses. Therefore, it's wise to treat the first 1-2 years as a practice period before making serious investments.
The Magic of Compound Interest and the Power of Time
The most powerful weapon in investing is compound interest. According to the Rule of 72, with a 6% annual return, your principal doubles in 12 years, and with a 12% return, it doubles in just 6 years.
The key phrase is "Money Never Sleeps." While we're sleeping, during weekends, our invested assets continue working. This is the fundamental difference between earned income and investment income.
Compound interest grows exponentially as time increases and amounts get larger. This is why you should start investing young - time becomes your ally. The earlier you start, the more time works in your favor.
The Necessity of Gold Investment
Including gold in your portfolio is also an important strategy. Gold serves two roles. First, it acts as a hedge against geopolitical risks. Gold prices tend to surge during wars or conflicts. Second, it serves as insurance against currency devaluation.
Comparing gold prices from 20 years ago to today shows about a 12-fold increase. This isn't because gold itself has changed, but because of currency devaluation due to increased money supply. Since money supply is likely to increase during future economic crises, including gold in your portfolio is necessary.
Real Estate vs. Stocks: Psychological Differences
Many people believe in "real estate never fails," but this requires a cautious approach. The psychological approach people take toward real estate versus stocks is quite different and interesting.
With real estate, people tend to take a long-term view without checking daily price fluctuations, while with stocks, they react sensitively to short-term changes. Additionally, real estate has practical value as housing, which can create greater psychological pressure.
Especially when real estate is purchased with loans, even if prices remain flat, the psychological pressure from interest payments is significant. In such situations, people might make mistakes despite having made good investments.
The Importance of Pension Investment
With the uncertain future of national pensions, personal pension preparation has become essential. Using investment-type pension products like IRPs or pension funds provides tax benefits and makes it easier to maintain a long-term investment perspective.
Pension investing has the advantage of naturally encouraging a long-term perspective. The mindset of "it's for retirement, so it'll be better in 10 years" helps you react less sensitively to short-term fluctuations.
Crises Will Definitely Come
Analyzing past crises like the Asian Financial Crisis, Global Financial Crisis, and COVID-19 pandemic reveals a common pattern: no one predicted these crises before they happened. Crises always emerge where people are complacent.
The root cause of crises is human greed and fear. Since these are unchanging aspects of human nature regardless of the era, crises will definitely come again. We just don't know when or in what form.
Therefore, we need to prepare for crises. Don't concentrate all assets in one place - diversification strategy of setting up multiple fish tanks is crucial. We must prepare so that we don't lose everything when crises hit.
In Conclusion
Investing isn't about chasing fast fish - it's about setting up fish tanks in multiple locations and waiting. Starting small to get comfortable with investing, managing risk through diversification, and using the power of compound interest to grow assets long-term is a wise investment strategy.
For young investors especially, time is their greatest asset. Don't be impatient trying to make big profits right away. Focus on consistently building investment habits and leveraging the power of time. While crises will definitely come, for well-prepared investors, they can actually become opportunities.
*Source: Reconstructed based on interview content with Oh Geon-young, Deputy General Manager of Shinhan Bank's WM Business Division*.