[Edaily Reporter Shin Ha-yeon ] “While the semiconductor industry was once unquestionably a cyclical industry, the recent artificial intelligence (AI) revolution has led to a surge in demand from hyperscalers and significantly improved sales and profitability for semiconductor companies, giving rise to the view that it is now a structural growth stock.”

Jeong Hoon, former vice president of Seoul Information Service, offered this analysis of the increasingly volatile domestic stock market in an interview with E-Daily on the 19th. Mr. Jeong, a data and AI expert, has led efforts in AI model development, data-driven decision-making, and credit rating model development during his tenure at Hana Financial Research Institute, the NH INVESTMENT & SECURITIES Big Data Center, and Lotte Members.

Recently, the domestic stock market has seen increased volatility, particularly among large-cap semiconductor stocks such as SamsungElectronics and SK hynix. While long-term growth expectations surrounding AI and high-bandwidth memory (HBM) remain strong, profit-taking following short-term surges combined with valuation concerns has made it difficult for retail investors to decide whether to buy or sell.

Former Vice President Jeong believes it is difficult to assess semiconductor stocks based solely on their price-to-earnings (P/E) ratio. “While it’s often said that you should buy when the P/E ratio is low and sell when it’s high, in cyclical industries like semiconductors, the advice is actually to buy when the P/E ratio is high and sell when it’s low,” he explained. “When a surge in demand is expected and companies expand production facilities, capital expenditures (CAPEX) increase and net income declines, causing the P/E ratio to rise—and this is precisely when it’s considered a good time to buy.” He went on to point out, “From an investor’s perspective, rather than focusing solely on individual companies, one should consider both the characteristics of the industry and the macroeconomic variables that affect it.”

He cited “trend-following” as a typical mistake retail investors are prone to make in volatile markets. This is the psychology where, when stock prices rise, investors buy late because they expect them to keep rising, and when prices fall, they either miss opportunities to buy at the bottom or sell out of fear, expecting further declines. Former Vice President Jeong pointed out, “The expectation that a moving object will continue in the same direction is akin to human instinct,” adding, “When stock prices keep rising, existing holders fail to sell at the peak, while non-holders are prone to making the mistake of buying at the top.”

He advised that when deciding whether to cut losses (selling stocks while accepting a loss), average down (buying more shares when the price falls to lower the average purchase price), or hold onto shares, one should focus on the company’s intrinsic value rather than the stock price itself. Citing André Kostolany’s analogy of “the dog on a leash and its owner,” he explained, “The dog represents fluctuating stock prices, while the owner represents the company’s intrinsic value,” and “Rather than staring at the stock screen all day and focusing only on the dog’s movements, you should concentrate more on the company’s intrinsic value—such as revenue and profits, the CEO’s statements, competitor trends, industry issues, and macroeconomic trends,” he said.

He also emphasized the need to be wary of becoming fixated on one’s own purchase price. Former Vice President Jeong said, “While there are various factors that influence stock prices—such as interest rates, exchange rates, supply and demand, market sentiment, and corporate earnings—the one factor that investors are heavily influenced by, even though it has no actual impact on the stock price, is ‘the price at which I bought it.’” He added, “Even though the price at which I bought it cannot logically influence the market, investors become fixated on that price when determining whether they are in a loss or a profit.”

Citing the example of SamsungElectronics, he said, “Among investors who bought SamsungElectronics shares in the 80,000-won range in 2021, a significant number likely waited more than four years after the stock price dropped to the 50,000-won range, and then sold their shares in 2025 when the price recovered to 80,000 won, thinking, ‘We’re in the clear now.’” He added, “However, if the profitability of semiconductor companies has changed significantly in the meantime due to the AI revolution, decisions must be made in line with the changed environment.”

He also identified the tendency to avoid losses as a factor that undermines the performance of individual investors. Former Executive Vice President Jeong explained, “According to prospect theory, humans have a psychological tendency to prefer certain gains and avoid certain losses.” He continued, “In profit situations, investors sell immediately at the slightest gain, but in loss situations, they hold on to avoid realizing the loss, resulting in an inability to sell falling stocks.”

Former Vice President Jeong advised that investors should establish a logical basis—rather than relying on emotion—before making an investment. “You shouldn’t buy a stock simply because you’re swept up in emotion; you need a logical framework explaining why you believe this stock will rise,” he said. “While your assumptions may be wrong, if you repeatedly follow a buying process based on logical grounds, you can gradually reduce your investment errors.” He continued, “Warren Buffett said there are no Samjin rules in investing,” adding, “Missing a good opportunity isn’t a major mistake; rather, seizing the wrong opportunity is the real blunder.”

Finally, he emphasized, “There are no eternal market leaders,” adding, “Just as semiconductors have been in the spotlight as market leaders for nearly two years, opportunities may eventually arise in essential sectors that have long been overlooked, such as chemicals, energy, and construction.”