Semiconductors seem to have a continuous theme, with ongoing growth drivers and innovations. Recently, even though Samsung Electronics has seen a decline in its influence and competitiveness, it still maintains a unique competitive edge, particularly in the memory sector. It seems that it will take some time for batteries to recover. However, in the U.S., you mentioned that growth stocks should be held. Are you referring to U.S. tech stocks? If so, which specific ones? There are many global companies. Personally, I think big tech is great, and if individual stocks are difficult, one can invest in the Nasdaq (QQQ) or the overall market. Recently, there are ETFs that include semiconductor companies like NVIDIA, Samsung Electronics, TSMC, and ASML. Playing with ETFs is also an option. If I had to pick a specific stock, I would prefer Alphabet, Google's parent company, because among the big tech companies, it has the lowest valuation. However, it seems...

In English, we use the expression feeling sleepy. Here, we have the best talent and a sense of pride, but there's a bit of a lack of urgency and desperation, which makes things move a bit slowly. It's similar to graduate students in a doctoral program; employees are working there, including Google engineers. However, among the seven companies, the valuation is the best, and in the AI era, the talent is top-notch, with the most research being conducted. Additionally, they already have a lot of data from the search sector. Therefore, I think the risks are low while the potential for steady growth is high. We aim to find stocks that generate returns greater than the risks involved. In that regard, Alphabet, represented by the ticker code GOOGL, is a good option. I'm also thinking about Tesla; on October 10th, we have our Robotaxi Day, where I will be driving autonomously.

What I felt, and then after gathering information through various channels locally, is that as we approach October 10, they are currently conducting a 24-hour full test. It seems they are confidently making announcements, and I've been hearing discussions here and there about it. If on October 12, when we actually check, there is nothing, investors will be quite disappointed. However, I think they might announce something substantial. The reason is that Tesla's stock price is just over $200, and the visible value related to electric vehicle batteries seems to be around $50 to $100 per share. There is already potential for a value exceeding $100, and even much higher, especially with AI and autonomous driving. Tesla has made significant achievements in this area, and the gap with other cars has widened considerably. In this regard, we might have a dark horse to look forward to.

Did you drive? A few days before I left, I applied for a test drive. I had an international driver's license, and I thought they would reject it when they checked my license. However, I found out that I could easily apply for the test drive with an international license. But I had to act a bit local. They asked questions like when I would buy a car and why I wanted to test drive. Interestingly, during a typical test drive, we usually sit next to the driver, but with Tesla's Autopilot, it knows everything about where the car is going. For example, if we are in Mapo and I set the destination to Sinchon, I can actually take a test drive alone without anyone next to me, and it drives properly.

At the headquarters, they monitor everything, so no one sits next to me. This completely overturns the concept of a car as we usually think of it. In Korea, there is some autopilot technology, and Hyundai has implemented a very low level of autonomous driving, which is quite impressive. I was surprised. How far did you drive? I drove about 20 kilometers. So, we don't need to hold the steering wheel; we can just relax like this, with our arms crossed. For example, if we want to drive from Mapo to a hotel in Haeundae, Busan, we can just set the destination. Nowadays, we can easily see the driving distance, so we don’t have to do anything. Of course, right now in Korea, mapping isn't fully developed, so the service isn't available. However, in the US, for instance, driving from San Francisco to LA takes about six to seven hours.

A car with a long driving range that charges a lot doesn't need to do anything at all. So, the only thing I have to do is promise that in case of an emergency, I will take the wheel. Last year, I had to show that I was ready to grab the wheel, but now I can keep my hands behind my back or do whatever I want, as long as I keep my eyes focused straight ahead. The camera monitors me, so if I look away for a moment, it alerts me to keep my eyes on the road. If I violate this five times, I am banned from autonomous driving for a week. It's amazing! The car can go to the destination all by itself, handling lane changes, right and left turns, and maintaining distance from the car in front perfectly. I didn't touch the wheel for 20 kilometers; not once! This means that I drive better than the best drivers in our country. I drive better!

The quality has improved significantly, so I recommend that the subscribers here, when they go to the United States, exchange their international licenses and try out self-driving; it will be a great experience. Currently, this is only available in the United States. Elon Musk has visited China several times this year, and before the end of the year, he is working to get approval for full self-driving under supervision in the U.S. Considering that China has a much larger population than the U.S., and that Chinese people are very focused on new technologies, if they receive this approval, it could lead to explosive growth. In the U.S., the fees for applying for full self-driving have been reduced. This is similar to subscription economies like Netflix or Amazon Prime.

Originally, it was $200 a month, but now it's been lowered to $99, which means they are trying to popularize it. I heard that there are about 5.5 million Tesla cars around the world, and the U.S. likely accounts for more than half of that. To achieve widespread adoption, they will need to lower the monthly fee even further. Elon Musk's goal is not just to sell a lot of electric cars but to make significant profits. Once there are tens of millions of Tesla electric cars globally, they can start implementing autonomous driving and services like robot taxis. From there, they will regularly charge service fees, similar to how Apple generates high valuations and profits from its services, which have a gross profit margin exceeding 70%. This is the direction Elon Musk envisions, and I believe a low-cost vehicle will be released next year.

About 25 to 30 thousand dollars, once that becomes widespread, autonomous driving will just require flipping a switch from headquarters, and it will be operational. However, wasn't the announcement for the robo-taxi delayed from October 11? It was supposed to happen in August, but they are likely doing extensive testing. When this kind of thing is done, they usually conduct a massive amount of testing. From what I've heard from engineers, companies like Apple have a lot of money and manpower, so when they create something new, they strive for exceptional perfection. However, Tesla, especially in the automotive sector, faces high market expectations. If there is even a small mistake or oversight, they can be criticized, and their reputation could be damaged, so it seems they are trying to achieve perfection. Now, in terms of investments, besides Tesla, which I also hold, there's also NVIDIA on the other side. NVIDIA is now...

What will happen in the future? NVIDIA will continue to maintain its unique profits for the time being. The second quarter results have just been announced, and personally, I think they were very good. The companies that are performing exceptionally well are facing what can be seen as excessive expectations. Their performance exceeded the market's average expectations but fell slightly short of the very high expectations. Overall, the results showed a 122% increase in revenue, and the gross profit margin was 75%, which is, in a way, an outstanding performance. Therefore, for the time being, they will continue to thrive. Now, regarding the next generation of chips, known as BlackBerry, there has been some controversy due to delays. Currently, TSMC is subcontracted to continue production, but the manufacturing process requires a significant level of difficulty, leading to some delays.

Jensen Huang mentioned that although the yield has slightly decreased, we are experiencing delays, but there is no fundamental problem. Starting from the fourth quarter, we will see revenue in the trillions based on the quarterly figures. So, while it is true that the valuation is somewhat high, a company with such outstanding competitiveness can receive that level of valuation. In reality, even if the valuation seems high, if the stock price remains stable, it will lower the valuation next year. Therefore, a high valuation is not necessarily a handicap for a high-growth company. However, there is a concern that Jensen, the CEO, sold some of his shares. He is one of the best-performing CEOs, and if he sold shares, it should be viewed as a sign of a peak. If he believes that this is not a peak, then the question arises: why would he sell? It raises concerns about the founder and controlling shareholder selling their stock.

We are somewhat excessive in our sensitivity. For example, if a controlling shareholder receives stock options, it is legally prohibited for us. When a controlling shareholder sells their stocks, people tend to think that they are cashing out. However, in the United States, this is not the case. For instance, Mark Zuckerberg continues to sell stocks and donates to his foundation, funding non-profit activities and continuously contributing to hospitals and other causes. Similarly, Jeff Bezos, the founder of Amazon, is not involved in daily management but sells stocks to purchase multi-billion dollar yachts and houses. Therefore, while selling stocks may not be seen as a positive sign, it does not necessarily indicate a negative outlook. In the short term, the stock price might fluctuate. In fact, the stock price dropped by about 20% after that, and it is currently in a phase of recovering to its previous peak. However, in the U.S., controlling shareholders typically hold their stocks for a long time, often at a level of around 50 trillion.

You hold stocks worth hundreds of billions, so you tend to sell a little and usually donate. You either donate or use the cash to buy a large house worth several hundred billion. These actions attract some attention, but it doesn't mean the company is failing. We don't need to interpret it that way. However, from another perspective, consider Warren Buffett, who sold his Apple stocks, the company with the highest market capitalization in the world. That seems to be related to valuation. In 2016, Apple was not as popular; although many people used it, it wasn't considered cool. It was a hardware manufacturing company, and Apple services were not yet in the spotlight. In 2016, the price-to-earnings ratio was around 12 to 13 times, whereas nowadays it stands at about 30 times. But Warren Buffett...

At that time, I made the discovery and accumulated most of it in 2016. This time, I sold off more than half, and my annualized return has been around 30% due to compounding. Over the past eight years, I have made an incredible amount of money, compounding at about 29% each year. Since I bought at such low prices, that became possible. I think about this: the current stock price is around $220 to $230. Warren Buffett generally expects a return of about 20% per year, so it is difficult to expect that level of return. Given that my overall portfolio exceeds 200 trillion won, that position makes up more than half of my entire portfolio. So, while it is a large scale, I have sold quite a bit. Although Apple is a good company, its growth potential is somewhat declining. I think we can consider it that way. In my opinion, our retail investors should focus on Tesla.

NVIDIA and companies like it can be viewed as stocks that can grow significantly, with potential returns exceeding 10%, even reaching 15% or 20%. While Apple has a much better return, it is a more stable company, and there is a slight difference in their DNA. Based on what the professor said, it seems that he believes the current investment sentiment rally has not yet ended and may continue for a while. 

When I visited Silicon Valley and talked to local engineers and venture capitalists, I found that their perspective is somewhat similar to ours. Of course, they know much more than we do, but they also consider the concept of AI as a tremendous event, comparable to the spread of the internet. However, they are uncertain about how long this will last and how much productivity it will generate; they don't know either. It feels a bit like a horse race, where everyone is running, and I can't just stop alone.

Betting is essentially about improving productivity and driving economic growth. Individual companies can also see their productivity rise, allowing them to achieve good results with fewer employees. When you look at engineers and people working with AI on-site, they definitely say it helps a lot. However, it's still too early to quantify this in numbers, as the AI revolution is in its infancy. While it's reasonable to maintain a healthy skepticism, there's no need to view this too pessimistically. Clearly, on Wall Street and in Silicon Valley, the AI era is unfolding, and it will provide tremendous opportunities. Yet, aside from the big tech companies like Microsoft and Meta, there are many smaller and mid-sized companies. The question remains, which of these companies will stand out among the larger firms?

It's not easy to play in the small and mid-cap stocks because we don't know if there will be new winners emerging. When a decent company does come up, the big tech companies tend to acquire them all. Ultimately, this is now being addressed by antitrust laws, with the U.S. government taking action against companies like Meta and Google. However, they still cleverly navigate various legal loopholes, so a significant portion of the growth generated by AI is still benefiting the big tech companies. It seems different from the past internet era; the big tech companies are now showing much more mature management know-how. NVIDIA is selling the tools, and several big tech companies are purchasing those tools. Google and Meta are likely among the largest buyers. In Silicon Valley, the question is who is currently leading in AI.

If you buy chips, the likelihood of actually making money is high. For example, during the Olympics, we can't know for sure who will win gold, but it seems likely that among the young athletes, someone will emerge as a gold medalist. Now, with AI, I believe there will be about three major companies that will encompass the entire world. Below that, there will be various companies organized by industry and country, creating a vertical structure. If we look at the big picture, there’s Microsoft, OpenAI, Google, and then there’s Anthropic, which was founded by former OpenAI employees. This is a private company, but these three companies currently dominate the global landscape. In terms of search, Google’s search engine is unrivaled. Of course, in South Korea, there are companies like Naver, but globally, Google monopolizes over 90% of the search market. So, while one company may dominate search, in AI, there will be at least three or four major players among them.

There are two companies that we are familiar with: Microsoft and OpenAI. Google is also a well-known player, and Anthropic is still in its early stages. The reactions to these companies have been very positive, making it difficult to predict how other companies will develop and evolve. 

As for the National Pension Service, the stock with the highest increase in investment in U.S. stocks is Nvidia, followed by Alphabet and Microsoft, which are also in the top five for equity increases. The National Pension Service continues to build its portfolio around AI-leading stocks. Professor, how do you view this? 

In foreign sovereign wealth funds, they often hire many foreign experts and scout talent extensively. However, our National Pension Service is quite well-organized with our homegrown experts. In that regard, they are outsourcing effectively, and recently, we have seen...

Maintaining a portfolio centered around big tech has shown to be effective, as the first half of the year has recently reported very good results. In that regard, I believe they are doing well. Additionally, the Korea Investment Corporation has been struggling with high valuation controversies regarding M7 stocks, which they are looking to buy. They are seeking investment opportunities in the AI industry infrastructure. Instead of holding onto some M7 stocks, they have invested in AI infrastructure companies. They have invested in wind power service sales, number issuance, and have purchased over 170,000 shares of essential equipment for intelligent power management. Moreover, they have increased their holdings in semiconductor-related stocks preferred by overseas retail investors, such as Qualcomm and Applied Materials. However, it seems to me that there is a slight divergence in direction. What do you think? KIC is not investing domestically but is focusing exclusively on overseas investments, which makes it somewhat more specialized in foreign investments compared to the National Pension Service, and they seem to take pride in their investment experience.

There are many options, so I'm betting a bit more aggressively now. However, it's hard to tell whether these stocks are selected directly by the individual or purchased by an outsourced foreign asset management company. In my opinion, continuing to play with semiconductor-related stocks is good, but rather than picking individual stocks, it might be better to consider ETFs. This is because there are continuous technological changes. Companies like Qualcomm are good, and they have made significant advancements, especially in the smartphone era. However, I'm curious about how much they will evolve in the AI era. In my view, stocks like NVIDIA and AMD might offer better opportunities, or even ASML, the Dutch semiconductor equipment company. Choosing stocks, especially moving away from big tech, is not easy, so focusing on semiconductor-related ETFs that fit the theme could be a better approach.

Whether it's sector stocks or looking at a larger scale, I think buying ETFs related to themes like AI might help in diversifying risk a bit more. In 2023, the secondary battery market led the market significantly, especially in Korea, and in 2024, the AI market is expected to take the lead. However, after AI, what sector will be the leading sector in Korea or the U.S. next year? It's a tough question, but I believe semiconductors will continue to be a theme. There are still growth drivers and innovations present. Recently, even though Samsung Electronics has seen a decline in influence and competitiveness, it still maintains a unique competitive edge in the memory sector. Recovery in the battery sector may take some time; companies like SK1 have too much debt, while others like LG Energy Solution and Samsung SDI are making significant investments.

In order for that investment to lead to profits, from the company's perspective, it is referred to as ROE, or return on equity. For the return on equity to be properly realized, it requires some time. Recently, foreign investors have been buying stocks, which has caused a brief surge, but I think the recovery might be somewhat temporary. The electric vehicle companies are still struggling and continually use the high battery prices as an excuse, indicating that they do not want to lower the prices of electric vehicles sufficiently. As a result, I believe that electric vehicle companies will continue to exert pressure on battery manufacturers regarding pricing. Therefore, it seems difficult for the market to achieve the sufficient profits that it desires for the time being.

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[1번째 책: 동기부여] 날개가 없다, 그래서 뛰는 거다
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[9번째 책: 경제경영] 머니 트렌드 2023
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