메뉴 메뉴
닫기
검색
 

LIFE

제 9 호 Information You Do Not Want to Miss for Stock Investment: For Stock Newbies to Make a Fortune

  • 작성일 2021-03-06
  • 좋아요 Like 4
  • 조회수 893
윤남호

Kicker: LIFE (STOCK MARKET)


Information You Do Not Want to Miss for Stock Investment:

: For Stock Newbies to Make a Fortune

By Dong- wook Kim, Editor/ Nam-Ho Yun, Reporter

smartpodo@kakao.com / tree32847@gmail.com


  When the KOSPI broke the 3,000 point mark, from late 2020, regardless of age or gender, everyone is becoming a shareholder. Among the new investors in the first half of 2020, 53.5% of the investment is made by people in their twenties, of which more than 25% are university student investors. University students’ interest in the stock market is at a climax right now. Compared to 2019, the number of new stock accounts of which 20s made has quadrupled and stock lectures and YouTube contents based on the stock information are highly increasing. Why are university students eager to invest in the stock market? What made them to be interested in stock investments? I will cover this social status from the perspective of university students. In addition, let us find out some information for university students who just started to invest.



Investing is Inevitable

  Since people started to wear a mask to protect themselves from the global pandemic, they also had to protect their wealth. First, the interest rate is near to zero (0.5%). This means that the economy is in a bad situation, and banks are not able to provide a high interest rate. Historically, college students preferred putting their money in a bank. However, with the interest rate coming down, there is almost no merit.



  Second, it is easier than ever to start investing in the stock market with a smartphone. MTS or Mobile Trading System has become popular among college students. They are familiar with using new technologies and smartphone applications. At the same time, internet banking also has become famous and easy to use. With their synergy, everyone can move their money 24/7 with a few taps and scrolls on the smartphone screen.


  Third, every price is going up. House prices in Seoul are a good example. The average house price (34 pyeong, 112.2m2) is now above 600 million Won and it is still going up. Even Bitcoin, which many consider as a dangerous asset, is now above 50 million Won. Looking at these prices, college students have no choice but to start investing their money into the stock market.



  There are many other reasons why college students eagerly invest their lump sum of money in the stocks. They may be different, but they all desire to make money for their future. Lots of opportunities and optimism seem to be lying in the stock market for most university students.


Needy Tips for Investing in Stocks

  You might wonder how can university students invest in the stock market. There is a list of things that college students should refer to when investing in stocks. Some people lose money when they invest, while some people earn a fortune. What are the differences between them? How can you earn money in the stock market?

  Usually, most of the normal investors tend to buy stocks by just looking at the graph. Without knowing the theory of buying and selling stocks, you have a great chance to lose your money. Stock is a unit of capital issued by a traded stock company listed on the stock market. In simple terms, it is for companies to make extra operating funds, so they give out some percentage of the management rights to their shareholders.



  You now know the basic term of how stock is traded in the market. Then you might ask, ‘When do stocks rise and fall? If stocks were issued by companies, are they the ones who are in charge of the price?’ This is half right and half wrong. Companies have a limited number of stocks, so they are not able to control the stock prices arbitrarily. The stock price basically follows the supply and demand law. Because the number of shares that can be issued is limited, if there are many people who want to buy, the price will go up and if there are many people who want to sell, the stock price will go down. However, there is another way that stock price can be decided. It is by estimating the value potential of a company. It chains with the supply and demand theory because people will start to buy more shares of a bright company.


  Referencing financial statements of the company can work too. Financial statements usually contain accounting reports of the financial status of an enterprise. They are a kind of an advertisement to shareholders for companies to report their financial status. There are four important factors to look out for in financial statements. They are balance sheets, income statements, cash flow statements and footnotes.


Summary of Financial Statement of Megastudy®

(Unit: one million won)


2020

2019

2018

2017

2016

Liquid Asset

83,724

90,650

81,373

55,381

25,920

Non-Current Asset

390,380

342,166

285,818

229,052

205,904

Total Assets

474,104

432.816

367.191

284.433

231.824

Current Liabilities

147,587

147,572

129,518

93,301

53,643

Non-Current Liabilities

50,565

34,687

21,719

13,329

6,455

Total Liabilities

198,152

182,259

151,237

106,630

60,098

Capital

1,184

1,182

1,176

1,162

1,162

Total Capital

275,952

250,557

215,954

177,803

171,726

Total Capital&Liabilities

474,104

432,816

367,191

284,433

231,824


  This sheet is the balance sheet of a company called ‘Megastudy’. The total assets of this company were sharply increasing from 2016 to 2019. You can also check that the total liabilities of the company are increasing which means the company needs more money for management. These are the signs that shareholders are after for this stock. The stability of a company depends on the increase of capital they own. Even though Megastudy® did not provide footnotes, they act as a simple summary for complex numbers in financial management. Thus, we can guess that Megastudy® is a stable right-wing directed company in the long term. For more details of companies, you can join some chatting rooms in kakaotalk which summarize the main events happening in the stock market.



All That Glitters is Not Gold


  Isaac Newton, who found Newton’s laws of motion, bought shares of a company named the “South Sea Company” in 1720. It was one of the so called “hot stocks” during that time. Unfortunately, he lost 20,000 Euro while investing in the company, which is now worth more than 130 million Won. He could make an outstanding theory by watching an apple falling, but he failed to predict when the stock price will fall. Even one of the greatest physicists could not beat the market and had to leave empty-handed.


  You have to ask yourself why you are willing to put your money in certain stocks. Is it because someone recommended the stocks? Or if you are totally new and just started investing because it is what others do, you should be careful. Fear Of Missing Out (FOMO) is what people usually underestimate. It is desirable to set your own financial goal and investment thesis. There are so many financial “gurus” out there on the internet. On YouTube, there are countless YouTubers recommending good-looking stocks. Interestingly, there is almost no one commenting when their hot stocks come crashing down. Everyone has to be responsible for their decisions.

  In addition, the stock market is not a get-rich-quick scheme. Every now and then, there will be ups and downs. Unprecedented events will happen. The ones who hold for the long term usually win. S&P 500 index for example, which contains 500 companies in the U.S., had an annual return of 10%-11% from 1926 to 2018. Therefore, if you invest your money in the stock market with your own decision and aim for the long term, the rest will naturally follow. 


<Historical chart of the S&P 500 Index>


Sources: http://corp.megastudy.net/sub04/sub02_2.php

http://www.sisamirae.com/news/article.html?no=42397

https://www.macrotrends.net/2324/sp-500-historical-chart-data