The stock market is a peculiar place. Stock prices can rise even when companies report losses, and they can fall despite record profits. Investors often sell on good news and buy on bad news. For those new to the stock market, this world can be perplexing, but its essence can be summed up simply: stock prices live off tomorrow, not today.
The Korean semiconductor industry in 2026 dramatically illustrates this point. Samsung Electronics reported record sales of 171.5 trillion won and operating profit of 89.5 trillion won in the second quarter, while SK Hynix also achieved record quarterly results with sales of 79.3 trillion won and operating profit of 60.5 trillion won, boasting an operating profit margin of 76%. The demand for high-bandwidth memory (HBM) and high-performance memory, spurred by AI, has brought unprecedented prosperity to the Korean semiconductor sector.
However, the stock market does not always move in tandem with a company's current performance. Investors often buy stocks in anticipation of future prosperity long before good results are announced, and by the time record profits are confirmed, the market's focus has already shifted to the next question: Will profits remain high next year? Will they increase in the following year? Will AI investments continue? What will happen to interest rates? How far will Chinese semiconductor companies catch up?
Thus, the stock market can be more sensitive to the direction and speed of performance than to absolute values. A company that earns 10 may surprise the market by earning 20, but if a company that earns 100 only earns 101, the market may be disappointed. This is the first paradox of stocks: the best performance does not necessarily mean the best stock price.
Another issue the Korean stock market must consider is whether the tremendous expectations brought by the semiconductor boom and the AI revolution have led to excessive optimism about the entire market. The stock market reflects the economy, but sometimes the reflection can be much larger than reality. When a bull market begins, investors initially look at corporate performance, then invest based on future expectations as prices rise, and eventually, they invest simply because others are making money. At the end, they buy stocks just because prices are rising. At this point, investment shifts from calculation to desire.
Economist Hyman Minsky's key insight into financial markets was that the longer stability and success last, the more people forget about risk and take on greater risks. This leads to increased debt and leverage, creating a structure that can shake the entire market with even a small shock. Thus, there is a paradox hidden in prosperity: the longer the boom lasts, the more caution is needed.
One of the most prominent investors of the 20th century, Sir John Templeton, understood market psychology well. His famous saying, "Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria," illustrates that when stock prices are at their lowest, people ignore them; when they rise slightly, they are skeptical; as they continue to rise, optimism grows; and when prices keep climbing, everyone believes they will become rich. It is this final stage that is the most dangerous.
Templeton emphasized not just a simple contrarian approach of acting against the crowd but rather maintaining a clear perspective on the distance between price and value. He advised looking at a company's value when people are in despair and reassessing prices when people are enthusiastic.
Warren Buffett's philosophy is not much different. One of the most important skills in investing, according to Buffett, is the ability to wait. In baseball terms, one does not need to swing at every pitch. Instead, one should wait for the best pitch and swing hard when it comes. The stock market is similar; it is not necessary to buy and sell every day or make money every day. The fundamental principle of investing is to buy good companies at reasonable prices and give them time to grow. Therefore, Buffett's investment philosophy is one of time rather than speed.
This is precisely what the Korean stock market should heed now. An increase in stock indices is a positive development. If the value of Korean companies rises, the financial assets of the public increase, and foreign capital values the Korean market highly, it should be welcomed. The long-discussed Korea discount being resolved is also desirable.
However, a rapid rise in stock prices does not equate to an improvement in the stock market.
A healthy stock market is not one where a few large stocks drive up the index. It is a market where corporate profits increase, productivity rises, innovative companies emerge, dividends and shareholder returns expand, and corporate governance improves, with these results reflected in stock prices over the long term.
Thus, the role of the government must also be clarified. It is right for the government to view the stock market as important. The capital market is where the wealth of the people converges and serves as the economic lifeblood for companies to raise growth funds, connecting national pensions, retirement funds, and individual retirement savings. However, the government's goal should not be the specific stock index itself.
What the government should create is not high stock prices but a good market.
When a good market is established, stock prices will follow as a result. Companies must work hard to generate profits and share those profits reasonably with shareholders, while making it difficult for major shareholders to exploit their interests, ensuring transparency in accounting, strictly punishing unfair trading, and allowing innovative companies to raise growth funds through the stock market, directing the public's long-term funds toward productive enterprises. This is much more challenging but far more important than short-term stock price support measures.
In particular, it is necessary to change the system so that the public's stock investments shift from short-term trading to long-term asset formation. This includes tax systems suitable for pensions and long-term investments, a culture of dividends, enhancing corporate value, investor protection, and financial education. The stock market should not become a massive casino for the public but rather a platform for citizen capitalism where the public can participate in the growth of good companies.
The same applies to semiconductors. The global competitiveness of Samsung Electronics and SK Hynix is a significant asset for the Korean economy, and it is true that the strategic value of memory is increasing in the AI era. Particularly, the competitiveness that Korean companies have secured in HBM and next-generation memory should not be underestimated.
However, even the best industries have cycles. When prices rise, supply increases; when profits grow, competitors enter; and when technological gaps widen, latecomers invest more. While Korean companies expand their capital investments, Chinese companies are also increasing their production capacity, and there is no guarantee that AI data center investments will continue to grow at the same pace. Therefore, what is needed now is neither pessimism about semiconductors nor unconditional optimism. Investors should have confidence in the industry but remain cool-headed about prices. This is the investor's stance.
More importantly, the Korean stock market must prepare for what comes after Samsung Electronics and SK Hynix. The wealth and technology earned from semiconductors must spread to materials, parts, and equipment, and lead to AI, robotics, physical AI, bio, energy, defense, shipbuilding, cultural content, and new manufacturing. The market's resilience will strengthen only when hundreds of competitive companies grow together, beyond the market capitalization of a few mega-companies.
The stock market ultimately reflects a country's industrial ecosystem. No matter how tall a few trees may be, a forest is not healthy without a variety of trees. A forest thrives with a mix of large and small trees, old and new growth.
Here, the stock market intersects with humanity, culture, and nature. Nature does not create a giant tree overnight. A seed must take root in the ground and endure rain and sunlight for decades to grow into a large tree. This is true for humans, companies, and national economies. The stock market is no different.
A market where companies produce better products and increase productivity year after year, exploring global markets and accumulating results over 10 or 20 years is far healthier than one that rises 10% today and another 10% tomorrow. This is why John Templeton warned against the crowd's euphoria and Warren Buffett emphasized the power of time and patience.
Wealth may seem to be created quickly, but it is ultimately completed over time.
The Korean stock market now stands at a crucial crossroads. After long worrying about undervaluation, the market is receiving a new assessment amid the global AI and semiconductor boom. This is undoubtedly an opportunity. However, it also requires a longer-term perspective.
Both the government and investors should avoid overreacting to daily fluctuations in stock indices. The government should aim to be one that enhances market trust rather than simply raising indices, companies should focus on increasing corporate value rather than managing stock prices, and investors should seek value and be patient rather than chasing prices.
The Korean stock market should aim to be the most trusted market in the world for decades rather than the highest market in just a few months. Stock prices may rise or fall, booms will eventually end, and recessions will pass. However, good companies will remain, good systems will endure, and trust will persist. When these three elements accumulate, stock prices will ultimately follow.
It is acceptable to proceed slowly. The key is to endure for the long haul.
This is the wisdom that Templeton and Buffett have demonstrated over many years in the market, and it is the most important principle that the Korean stock market must not forget amid its current boom.
Yet, let us delve a step further. There is an old saying in the stock market: "Stock prices are unknown even to ghosts." While it may sound humorous, it accurately captures the essence of the stock market. Even the world's top economists, Wall Street investment banks, and fund managers with decades of experience cannot predict tomorrow's stock prices with certainty. This is because corporate performance, interest rates, exchange rates, war and peace, politics and technology, human greed and fear all simultaneously influence prices.
The principles do not disappear simply because we have entered the age of artificial intelligence. AI can read and analyze far more data than humans, but it cannot perfectly calculate all the randomness and human desires in the world.
Over 2,500 years ago, Laozi said in Chapter 58 of the "Tao Te Ching":
禍兮福之所倚 福兮禍之所伏.
This means that misfortune leans on fortune, and fortune hides within misfortune. Few places illustrate this saying as aptly as the stock market. At the moment when everyone perceives a negative factor, that very factor may already be reflected in prices, giving birth to new opportunities. Conversely, when everyone cheers for positive news, risks may be hidden within that optimism. Within a crash lies the seed of a rise, and within a surge lies the shadow of a fall.
Viewing the market through Laozi's wisdom allows investors not to become overly excited when good things happen or to despair as if the world has ended when bad things occur. It is about seeing misfortune within fortune and fortune within misfortune. This is the balance of an investor.
The "I Ching" takes this a step further. In the "Appended Judgments," it states:
窮則變 變則通 通則久.
When in difficulty, change; when change occurs, it becomes clear; when clarity is achieved, it lasts long. This can be interpreted to mean that there is no eternal rise or eternal fall. Spring gives way to summer, summer peaks and transitions to autumn, and when winter's cold passes, spring returns. This is true for nature, human life, companies, industries, economies, and the stock market; they all follow this great cycle. When a boom reaches its peak, new changes begin, and when a recession deepens, new industries and companies are born. Change is the essence of the market.
Therefore, a wise investor accepts the fact that the future can change rather than trying to predict it accurately and prepares to endure that change. This involves selecting good companies, avoiding excessive debt, not putting all eggs in one basket, and allowing sufficient time.
The government should also follow suit. Instead of trying to predict tomorrow's stock index, it should create a market that can withstand any changes. During booms, it should guard against overheating, and during recessions, it should ensure that the market's foundation does not crumble, creating a system where companies and investors can grow together over the long term.
Laozi taught that fortune and misfortune lean on each other, and the "I Ching" stated that when in difficulty, change occurs, and when change occurs, clarity is achieved, leading to longevity. Thousands of years later, Templeton warned against the crowd's euphoria, and Buffett demonstrated the power of patience and time.
Eastern classics and Western investment philosophies unexpectedly converge in this regard.
Do not try to conquer the market; instead, understand its principles.
Stock prices are unknown even to ghosts. Therefore, we must be even more humble. Do not believe that today's rise is an eternal ascent, nor should today's fall be seen as eternal despair.
The same applies to the Korean stock market. The ultimate goal of the Korean capital market cannot be how much the index surpasses at what time. What matters is not how high it goes but how it goes, and not how fast it goes but how long it lasts. Sustainable growth is more important than rapid rises, market trust is more crucial than short-term stimulus, investment is preferable to speculation, and value is more significant than price.
At the center of it all are humans. It is humans who create companies, buy and sell stocks, and are swayed by greed and fear. Humans create culture, and culture builds market trust, all of which is again placed within the cycle of nature.
Humanity, culture, and nature.
The stock market ultimately exists within that order. Like Laozi's teaching of seeing misfortune within fortune, accepting change as taught by the "I Ching," being wary of the crowd's euphoria as Templeton advised, and having the patience to wait as Buffett exemplified, what the Korean stock market needs now may not be a new secret but this ancient wisdom.
It is acceptable to proceed slowly. It is fine to waver. The key is to endure for the long haul.
This is the path from the emptiness (虛) of the Korean stock market to its reality (實).
* This article has been translated by AI.
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