However, there is a problem with the half-and-half investment strategy. Our country's stock market has often experienced what is called the lost decade. This happened in the 1990s, and the 2010s were also, in fact, a lost decade. Because of these issues, even though the half-and-half investment strategy is a good strategy, there are cases where it cannot be maintained over a long period. To solve this problem, a strategy was created. 

Hello, I am economist Hong Chun-wook. Today, I am joined by PD Kim Yoo-ri to discuss investment strategies, particularly asset allocation strategies. Hello, PD Kim. 

Hello, Dr. Hong. I would like to focus on the existing Hong Chun-wook investment method, the half-and-half three-minute method, and the total investment strategy. Although it was developed some time ago, it still works well. There may be subscribers who have recently joined us, so could you please provide a basic explanation?

I would like to request that first, our country's main market and the exchange rate move in opposite directions. So, I want to mention that when the won to dollar exchange rate skyrockets, like in the fall of 2022 when the exchange rate was around 1,450 won, the composite stock price index almost broke 2,000. This is how our country operates. The investment method that utilizes this is called half-and-half investment. 

Simply put, you invest 50% in KOSPI 200, and 50% in US SOFR or US 10-year futures, or in any investment products related to US bonds. So, you invest this way, and in 2022, there was a significant profit from SOFR and US 10-year futures, while on the contrary, stocks dropped about 30 to 40% as they fell from 3,300 to 2,000. Now, what happens at the end of 2022 and the beginning of 2023? Here, it will be around 4.

The stock market has probably dropped more than 20%, right? So, let's just calculate it as 4. On the other hand, if we invested in the US and the exchange rate surged to 6, then by investing in dollars, we would have gained a currency profit of 10%. Therefore, we are buying undervalued Korean stocks. This is how we perform rebalancing. If we consistently adjust the ratio to maintain a 50-50 balance, we can expect an average annual return of about 7% over the past 40 years with this half-and-half investment strategy. However, there are some issues with the half-and-half investment strategy. One problem is that the Korean stock market has experienced lost decades. The 1990s were one such period, and the 2010s were also essentially a lost decade. If it hadn't reached 3,000 after the COVID-19 pandemic, the secondary market would have actually...

You may remember that there was a market with almost no momentum from 2008 to 2016, where the composite stock price index wandered around 2000 for nearly ten years. Because of these issues, the half-and-half investment strategy is indeed a very good strategy. However, there are times when it is difficult to maintain this investment strategy for a long period. The strategy created to solve this problem is the three-part investment method. The three-part investment method is simple: 3, 3, 3. What does it mean? You just learned about it: buying KOSPI 100. Then, the remaining 3 is for S&P 500 TR, and the last 3 is for either SOFL or, if you prefer, U.S. Treasury 10-year futures. I personally buy U.S. Treasury 10-year futures. This is how you implement the three-part investment method. If we assume that this investment method has been executed since the 2000s, it is because, before the foreign exchange market opened, there were limited ways for people in our country to invest overseas.

Since the domestic market has been opened up for about two years, if we look at the returns, they have recorded a performance higher than 7%. Even in years when there are losses, it only happens about once every ten years, showing a very stable performance. Therefore, rather than a 50-50 investment strategy, I believe that the three-asset investment strategy is a much better approach. Of course, there is fear associated with investing in foreign stocks, especially when two out of three assets are stocks. However, on the other hand, two of these three assets are dollar-denominated, which tend to be more resilient during economic downturns. So, if you invest using the three-asset strategy, you might only experience losses about once every ten years, while achieving returns that I think are better than the 50-50 strategy. I believe this is the best strategy I can recommend for those who need to invest actively, especially those in their 20s and 30s.

However, after discussing this strategy, I often hear people say, I'm a bit hesitant about investing so much in stocks. Is there a way to diversify my portfolio with different assets? For those individuals, I recommend the Talmud investment method. The first principle of the Talmud is to invest in Korean stocks, which is the same as before, at 33%. The second principle is to invest in U.S. Treasury bonds, specifically 10-year futures, which is also the same. But when it comes to U.S. stocks, I suggest purchasing U.S. REIT ETFs like VNQ. In other words, by having a portfolio that includes stocks, cash, or government bonds, and real estate, all of which move in different directions, the Talmud strategy aims to achieve more stable returns. Another advantage of the Talmud strategy is that it provides high dividends; for example, REITs typically offer around 4%.

It offers a dividend of about 5%. So, it's convenient to use the cash generated from this REIT for rebalancing. This means you don't have to sell anything to rebalance; instead, you can hold onto the cash from the REIT and determine where the best bargains are for rebalancing. This aspect is a significant advantage of the strategy. For those who are afraid of investing a whole 30% of their assets in stocks, I think the Talmud investment method could serve as an alternative. Now, for those who need cash in the short term, what investment strategy would be suitable? If the funds have a short maturity, say within a year, for those who want to take a chance, I can only say to study the stocks diligently. However, among various preferences, some people ask if they can operate conservatively with MMFs.

There are many people here, and I want to recommend the 80-20 strategy. What does the 80 refer to? As I mentioned earlier, it's about buying KOFI, which is an ETF that invests in MMFs. Anyway, this has no fees for mid-term redemptions, so I believe it's better than bank deposits. So, you would hold about 80% in KOFI. Then, there's the remaining 20%. You can split that equally between gold and stocks. So, I call it an 80-10-10 portfolio, which is similar to a structured ELS. What this means is that it involves holding a large amount of cash and using the interest earned to buy options. However, instead of buying options, I invest evenly in gold and stocks, so when the prices of gold or stocks drop significantly, it allows for...

How about this? If we invest with an interest rate of 80%, we can mitigate losses since the possibility of losing the principal is almost negligible with a 10% investment. Conversely, when stock prices rise, they can increase by more than 20 or 30%. In that case, we can realize the difference and reinvest it in savings. So, in a way, this strategy offers the potential for a return greater than the 3% interest from just keeping it in savings, while maintaining a very low risk of loss. For those who want to increase their returns even if it means slightly reducing risk, which of these three investment methods might be suitable? When it comes to investing in Korean stocks, there is a question about what happens if the dollar weakens when the Korean won depreciates. However, Korean stocks tend to compensate for that risk, making it a worthwhile strategy. Now, let’s talk about American REIT ETFs.

많이 주셨는데 추천해 주실 만한 채권 ETF가 있을까요? 저는 미국 70년 선물 ETF를 추천합니다. 이게 왜 추천하냐면, 이건 채권 업계의 TR이에요. '선물'이라는 말이 붙어 있는 것에 대해 겁을 먹으시는 분들이 계신데, 그건 아니고요. 이자는 가격에 녹인다는 뜻으로 생각하시면 됩니다. 그래서 저는 미국 국채 70년 선물을 좋아합니다. 물론 리스크를 감수하시는 분들은 30년짜리 미국 채권을 사시는 분들도 있겠지만, 저는 간이 작아서 그런 상품은 무서워서 못 하니까요. 여러분들께서 투자하실 때 참고하시면 좋을 것 같습니다. 지금까지 경청해 주셔서 대단히 감사합니다.

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"환율의 미래"와 "프랑스 탐방기" 등 10여권의 책을 쓴, 이코노미스트 홍춘욱입니다. 25년 넘게 이코노미스트 일을 하면서, 반복되는 질문에 답하느라 힘들었는데.. 동영상을 통해 자주 묻는 질문에 대해 쉽게 답하고자 합니다.


*비지니스문의 : hong8706@us-all.co.kr
*강연 문의: https://c11.kr/19l7h


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