To take control of your money, you need to read its flow!

28 years of studying money, Korea's best economist!
Dr. Hong Chun-wook shares his "realistic" economics lessons and the best investment strategies.

『The History of Money Repeats Itself』 Dr. Hong Chun-wook, Korea's top economist, has put all his know-how from 28 years of studying money into this book, which contains practical advice on economic trends, real estate, stocks, and investments, including how to read the flow of money.
To take control of money, we must know how to read the flow of money.
Dr. Hong Chun-wook chose "reading the flow of money" as the most important inheritance to pass on to his son. By compiling his insights on money, he offers practical investment methods to protect yourself in uncertain times.


The author's solid investment track record, built as an economist at banks and securities firms, an investment management manager at the National Pension Service, and an economics and management scholar, provides clear direction for how to proceed in these uncertain times of COVID-19 and low interest rates.
The author's expert analysis of three financial variables—interest rates, stock prices, and exchange rates—that have a significant impact on our lives but are largely unknown, is a valuable aid in understanding economic trends.
As an economic commentator for the public, this book's greatest strength is its insightful coverage of the latest economic data and key issues, while also providing insightful information about the real world and money.
This is an essential investment guide, especially for novice investors like Joo-rin and Burin, who are unsure of what to pay attention to and focus on when making decisions involving money.

What was the most talked-about buzzword of 2020? There were many, but the phrase "sudden beggar" ("sudden beggar") struck me the most.
A sudden break-even is when you suddenly find yourself feeling poor, even though you had money like before, without doing anything special.
This is an expression that describes the phenomenon of falling into relative poverty even though one's income or assets have not significantly changed from before.
In a society like ours where people are so concerned about others' reputations, it's hard not to feel stressed when the wealth gap widens so dramatically.
Especially if you haven't joined the investment wave these days, the feeling of being suddenly broke can be even more intense.

---From "People Who Became 'Suddenly Poor' After Staying Still"

I wish people wouldn't feel guilty about using money to alleviate the inconveniences or frustrations they encounter in life.
This is because human time is limited, and the wages that an individual can earn through physical labor are also limited.
So, don't just focus on making money, but also on managing your assets well.
That means we need to create a system where 'money makes money'.
Rather than simply asking people questions like, "Are there any good theme stocks?", I hope they'll shift their focus to asking how they can create a system that makes money.
Instead of wandering the forest looking for golden eggs, why not think about becoming a farmer who "raises the goose that lays golden eggs"?
---From "If you want to become rich, change your thinking right away"

Some people ask, “Should I study auctions now that the auction market is so hot?”
To conclude, I think studying auctions is essential for the 2030 generation.
Because the auction winning bid rate fluctuates several times a year.
The most representative period was early 2019.
At the time, the global economy was experiencing significant difficulties due to the aftermath of the US-China trade dispute, and the Bank of Korea had raised its policy interest rate to 1.75%.
Two of the three factors that determine the direction of real estate prices have moved in a negative direction (the three factors that determine the direction of real estate prices will be discussed in detail in the next section).


As a result, the auction market entered an ice age.
In particular, the successful bid rate for apartments in Seoul, especially those in Gangnam, has plummeted.
In March 2019, the apartment bid-to-sale rate in this area was 66.7%.
At the time, there was a temporary shock factor, such as about 10 auctioned properties of a specific apartment in Seocho-gu being sold at around 50%, which may have also influenced the sharp drop in the apartment auction price rate.
However, even when looking at all apartments in Seoul, it is quite surprising that the auction winning bid rate for apartments in Seoul fell to about 82% during the same period.
---From "If I were to go back to being 30, would I study auctions?"

The most important principle when raising seed money in a difficult environment is to invest in assets that increase in value during a recession.
In the words of investor Nassim Nicholas Taleb, famous for predicting the 2008 crisis, "anti-fragile" assets are the best places to raise seed money.
Antifragility here refers to assets or characteristics that have the property of being resilient in times of crisis.
A representative example is ‘US Treasury bonds’.
Looking at the price movement of the listed index fund (305080) investing in U.S. Treasury bonds, we can see that it rose 16.4% as of the end of March 2020 compared to the end of 2019.
The spread of the coronavirus has frozen the economy and caused panic in financial markets, but the price of U.S. Treasury bonds has actually surged.
---From "Let's invest in safe assets that are not shaken by crises"

The key takeaways from this investment case study for dual-income couples are as follows:
Even if you assume that your savings don't increase by a single won each year for 20 years, if you implement the so-called "switching strategy" of investing in dollar assets and then switching to won assets, your investment principal will more than double.
Moreover, if you had some seed money or increased your savings each year, your investment performance would have been even greater.
There is one more advantage to utilizing this switching strategy.
That means your retirement age is automatically determined.
That is, you can invest in Korean Won during a period of rapid exchange rate fluctuations, say once every five or ten years, and when you see results, you can quit your job as you have always dreamed.
This means that the best time to retire is when exchange rate gains are maximized and Korean assets are traded cheaply.
---From "Action Plan for Dollar Asset Investment"

Therefore, rather than investing 100% in Korean stocks, diversifying your investments into US bonds and other assets is a way to increase returns and reduce investment risk.
Of course, no matter how much you diversify your investments, you can't completely eliminate risk.
But trying to avoid all risk can be the riskiest choice in the investing world.
The more you try to avoid taking any risks, the lower your investment performance will be.
For example, while bank deposits may be the safest investment, it's important to keep in mind that in an environment of ultra-low interest rates that fall below the consumer price inflation rate, they can actually lead to real losses.
Therefore, we recommend investing in a way that aims for the expected returns from stock investments while controlling the level of risk at a certain level (for example, a negative return once every 10 years) through diversification.
- p.111, from “Why is the Korean stock market so volatile?”

If we summarize the story in Chapter 4, we can see three facts.
First, the Korean economy's growth rate has slowed compared to the past as investment has contracted since the foreign exchange crisis.
Second, while innovative industries such as semiconductors and automobiles, where investment is concentrated, are still experiencing high growth, jobs in these sectors have not increased as quickly as expected.
Third, as the information and communications revolution progresses, production efficiency increases, and the impact of globalization intensifies, competition for jobs in domestic industries such as construction and the restaurant industry has become more intense than before.
Considering these circumstances, it seems unlikely that our country's perceived economic situation will improve significantly.
As the minimum wage rises, the influx of foreign workers is likely to increase further, and key export industries that drive innovation are increasingly reducing hiring, including by abolishing public recruitment.
Therefore, I believe that active 'investment' is essential, except for a very few capable (and lucky) people.
---From "Employment Doors That Won't Open Even If Exports Increase"

When a recession hits and you sell your dollars to buy stocks, it would be a good idea to prioritize companies with the following characteristics and include them on your buying list.

1.
After a stock price crash, when a controlling shareholder actively purchases stocks or gives them to his or her children
2.
When raising dividends or paying new dividends even during a recession
3.
When a high-quality growth stock with five characteristics (brand power, switching costs, secrecy, price competitiveness, and platform) crashes in a panic
---From "When Stock Prices Crash, It's Time to Buy Quality Growth Stocks"

Here, the National Pension Style does not mean investing in the same way as the National Pension, but rather appropriately allocating domestic and foreign assets and 'rebalancing' them in a timely manner.
This is how you consistently achieve your target asset ratio.
As my case demonstrates, rebalancing not only improves returns but also avoids the risk of your holdings suddenly losing value.
In other words, by holding assets (dollar government bonds) that move in the opposite direction to stocks, losses are limited even in a crash like the one in March 2020. In addition, during the rebalancing process, the company continuously "buys low" by selling assets that have risen significantly in value and purchasing assets that have fallen in value.


As we've seen before, the most popular piece of information when buying stocks during the March 2020 stock market crash was "buyouts by major shareholders."
When a stock price plummets, it is a very positive sign when a major shareholder buys back shares directly or gives them to his or her children.
From the perspective of an insider who knows the company's situation best, it can be seen as an action that announces internally and externally that one has judged that 'this company is cheap.'
I bought stocks when rebalancing during my investment process, but you don't have to buy only stocks.
There are a variety of listed index funds, so investing in one that suits your preferences is a good option.

---From "Using the 'National Pension Style' Asset Allocation Strategy in Your 50s"