Investment Choices Differ Between Savvy and Novice Investors

Everyone dreams of hitting it big in the stock market, but opportunities for significant gains do not come to all. When one side profits, the other often faces losses. A market where everyone wins is nonexistent.

Yet, retail investors continue to chase after big returns. Warren Buffett's advice, "Be fearful when others are greedy, and greedy when others are fearful," often falls on deaf ears. As a result, many investors buy during market dips and sell for profits when prices rise, leading to a trend of short-term trading.

Is there a guide for retail investors standing on the line between success and failure? Following the investment strategies of seasoned investors is one of the best approaches. The Aju Economic Daily commissioned Mirae Asset Securities to analyze the top 1% and bottom 1% of investor returns for June. Where do you stand on the crossroads between savvy and novice investing?

Mirae Asset Securities analyzed the investment preferences of individual clients with net assets exceeding 1 million won, revealing a stark contrast between the choices of the top 1% and bottom 1% of investors. The top 1% focused their investments on leading stocks in the AI semiconductor sector, such as SK Hynix and Samsung Electronics. In contrast, the bottom 1% leaned towards traditional large-cap stocks like LG Electronics and SK Telecom, which are generally considered more defensive.

Among the top 10 picks of the top 1% investors, SK Hynix ranked first, followed by Padu, Samsung Electronics, Hive, and Samsung SDI in the second to fifth positions. The sixth to tenth spots included EcoPro, BH, APAL, EcoPro BM, and Korea Electric Power Corporation.

The portfolios of these top investors can be summarized by a strategy of following leading stocks. There was a concentrated buying interest in semiconductor equipment and secondary battery stocks, benefiting directly from the expansion of AI investments. Stocks related to semiconductors, such as SK Hynix, Samsung Electronics, Padu, and BH, dominated the rankings, while EcoPro, EcoPro BM, and Samsung SDI represented the secondary battery sector. A high allocation to growth industries leading the market is a common trait among high-return investors.

Notably, not all of the top 1% investors' most purchased stocks saw price increases. During June, aside from SK Hynix (up 13.59%) and Samsung Electronics (up 5.36%), eight of the top ten stocks recorded negative returns. EcoPro BM (-34.33%), BH (-30.67%), Samsung SDI (-29.22%), EcoPro (-23.31%), Padu (-21.94%), and Hive (-12.68%) experienced significant declines. APAL also saw a slight drop of -2.53%. This suggests that high-return investors did not simply buy rising stocks but actively traded and swapped stocks centered around market leaders to achieve their results.

What stocks did the bottom 1% of investors choose? The most purchased stock among this group was LG Electronics. Following LG Electronics, the second to fifth spots were occupied by LG Innotek, SK Telecom, LG CNS, and Jeju Semiconductor. The sixth to tenth positions included Wonik IPS, LS ELECTRIC, SK Square, Hanmi Semiconductor, and Peace Peace Studio.

The bottom tier showed a higher proportion of defensive stocks, primarily from LG affiliates and telecommunications. However, semiconductor stocks like Jeju Semiconductor, Wonik IPS, and Hanmi Semiconductor were also included, indicating that the timing of stock selection and purchases significantly impacted their returns.

Notably, the top purchased stock among the bottom 1% was Peace Peace Studio, a fashion and lifestyle company that symbolizes the struggles of public offering investments. Peace Peace Studio was listed on the KOSDAQ on May 8 but has since fallen approximately 36% from its initial public offering price of 21,500 won on its first day of trading, closing at 5,330 won on July 1, a drop of 75.2% from the IPO price.

The actual price movements of the most purchased stocks among the bottom 1% also mostly recorded negative returns. LG Innotek (-32.72%) saw the largest decline, followed by LG CNS (-30.76%), LG Electronics (-30.72%), SK Telecom (-12.13%), and Hanmi Semiconductor (-9.04%). LS ELECTRIC also experienced a slight drop of -1.45%. However, Wonik IPS (27.12%) and LG Innotek (10.30%) managed to close higher.

In foreign stock investments, the strategies of high-return and low-return investors were also distinctly different. The top purchased stock among the top 1% investors was the high-profile SpaceX. The stock price of SpaceX has significantly exceeded its IPO price of $135, even surpassing $200, but as of July 1, it was trading around $130, close to its IPO price.

Excluding SpaceX, the investment strategy of high-return foreign stock investors leaned towards leverage betting. The second to fifth positions included Roundhill T-REX DRAM Daily 2x ETF, GraniteShares Intel 2x ETF, Strategy, and Defiance IonQ 2x ETF. The sixth to tenth positions also featured leveraged products like TRADR ASTS Daily 2x ETF and ProShares UltraPro QQQ.

In contrast, the top purchased stock among the bottom 1% investors was Micron Technology, followed by SpaceX, Broadcom, T-REX MSTR Daily 2x ETF, and T-REX RDW Daily 2x ETF in the second to fifth spots. The sixth to tenth positions included GraniteShares Marvel 2x ETF, Roundhill T-REX DRAM Daily 2x ETF, and Leveraged Shares SpaceX 2x ETF.

A representative from Mirae Asset Securities stated, "While both the top 1% and bottom 1% investors included some of the same stocks like SpaceX, the returns were starkly different. Ultimately, the timing of buying and selling created this gap. It is clear that those who actively engaged in the booming AI semiconductor sector achieved better returns."

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