[Edaily Reporter kyoungeun kim ] Bae Jae-kyu, CEO of Korea Investment Trust Management, recently described the recent market plunge as a “temperamental lover” that “brings hope and joy one moment, only to inflict great pain the next.” He emphasized that during the artificial intelligence (AI) technological revolution, a strategy of holding the entire growth sector via exchange-traded funds (ETFs) for the long term is more effective than investing in individual stocks.

In a post titled “A Temperamental Lover and the Technological Revolution” on his Facebook page, CEO Bae noted, “As of the 15th, the KOSPI has risen about 32% from the end of last year but has fallen about 39% from its year-to-date closing high,” diagnosing the market as “one with a very significant decline from its peak.”

CEO Bae highlighted the commonalities among past technological revolutions, such as the steam engine, railroads, electricity, and the internet. He explained, “When a new general-purpose technology emerges, high expectations are formed, massive investment capital floods in, and infrastructure providers are the first to benefit.” He added, “However, it takes a considerable amount of time for the companies implementing the technology to generate sufficient profits, and it is precisely this ‘time gap between investment and profit realization’ that poses a significant problem.” He went on to explain, “When investment competition becomes overheated, excess capacity and financial debt accumulate, and a bubble forms in the stock market.” He added, “If interest rates rise or expected returns decline, some companies face bankruptcy or restructuring.”

CEO Bae believed the AI industry is following a similar path. He cited high expectations, massive investment competition, the gap between investment and profit realization, deep financial intervention, and a reassessment of expected returns as evidence. In particular, regarding NVIDIA’s push to launch a financial platform—in partnership with global financial institutions—to attract investment capital using graphics processing units (GPUs) and data centers as underlying assets, he remarked, “While this is reminiscent of vendor financing by telecommunications equipment companies during the Internet era, it goes beyond that in that it combines GPU-backed loans, private credit, and long-term lease agreements,” and “It could become a conduit for expanding overinvestment and spreading industry risks to the financial markets.”

Regarding the recent controversy over OpenAI’s annualized revenue, he said, “Although the discrepancy between the two figures stemmed primarily from differences in revenue calculation methods—not an actual decline in profits—the market reacted strongly,” adding, “This demonstrates just how high expectations for AI companies’ future earnings have become.” He continued, “While we cannot yet conclude that a financial crisis has hit the AI industry as a whole, it seems clear that investors have begun to seriously evaluate companies’ actual profitability and financial soundness.”

He identified Big Tech as the winners in the AI investment race. CEO Bae assessed, “Big Tech companies like Microsoft, Google, Amazon, and Meta are both technology developers and technology application companies,” adding, “They can sustain long-term investment competition thanks to the massive cash flow from their existing businesses.” On the other hand, he pointed out, “Companies that rely heavily on debt and external investment capital may face financial difficulties before securing sufficient profits, even if AI technology is commercialized.”

He identified Big Tech, the Nasdaq 100 (an extension of Big Tech), and the global semiconductor sector as the three key pillars of long-term investment. CEO Bae noted, “Semiconductor companies such as NVIDIA, TSMC, SK hynix(000660), SamsungElectronics(005930), and ASML are likely to remain important even if the competitive landscape for AI models shifts,” while emphasizing, “It is advisable to invest in the entire ecosystem rather than in specific semiconductors like memory chips.” He viewed application-based industries, such as Agentic AI and Physical AI, as having significant growth potential but noted that it is still too early to determine the ultimate winners.

He recommended ETFs as an investment vehicle. CEO Bae said, “Even if it is difficult to predict the success or failure of individual companies, using ETFs allows you to participate in the changes of the entire growth industry,” adding, “You can establish three investment pillars by using the Nasdaq 100 ETF as a base and adding Big Tech ETFs and global semiconductor ETFs.” However, he advised that since the same companies may be included in multiple ETFs, investors should carefully review the actual weightings of each stock.

He also outlined practical principles: △ Set a long-term investment horizon of about 10 years and keep it separate from short-term funds; △ Invest regularly rather than relying on market forecasts or timing the market; △ Avoid excessive leverage; and △ Regularly assess an industry’s structural competitiveness and a company’s cash-generating ability rather than focusing on short-term stock price fluctuations.

CEO Bae emphasized, “The stock market will continue to behave like a ‘temperamental lover’—one that brings us joy one moment and pain the next.” He added, “Rather than trying to predict temporary stock price fluctuations, if you select industries poised for long-term growth and invest with a sufficient time horizon, your chances of participating in the new wealth created by the technological revolution will increase.”