Today, we have Director Jang Woo-jin with us to gain insights and investment ideas regarding stocks. Hello, Director. It's nice to see you again. I heard that you have prepared some content related to the upcoming U.S. presidential election, which is why I invited you here today. In analyzing the videos from the last session at Dal Bookstore, I noticed that many people are looking for investment opportunities. They often say that this is a real opportunity, and they should wait to invest. I believe that this upcoming U.S. presidential election presents a significant opportunity, and I wanted to share my thoughts and the data I have gathered. This is quite interesting. Oh, really? I'm looking forward to it. It may seem obvious, but let's take a look at the trends of the S&P 500 index before and after the U.S. presidential election.

Now, regarding the Howard Walker of Jo Ju, I have been organizing this since the time of his father, Mr. Boo. If you look at November 1988, there was a presidential election. Wow, that was already 30 years ago. So, one year before the election, you can expect a lot of campaign promotions and discussions about policies during this period, which makes it a favorable time. If you look at the market during this time, everything went up except for Barack Obama. However, aside from the financial crisis in 2008, everything else increased by about 10% to 20%, right? Everything went up except for the financial crisis. The atmosphere was good in the year leading up to the election. Now, what about the year after the election? If you look at that, everything went up except for George W. Bush and his son. Wasn't there a terrorist incident in November '91?

That's right, that's right. So, it's the bubble, right? Yes, it's the bubble. So, looking back one year, one year is good, and that's fine. Looking back one month or six months, it seems a bit different. It's different, right? When the presidential election just happened, there was a bit of fluctuation. If you look at one month after the election, it was negative during the bubble, and there were some negatives during George Bush's time as well. There were indeed some negatives. If you look at the six-month mark, there were also negatives. But during this time, in the 2000s, it was during the bubble, right? At that time, the shock from the financial crisis was still present, so it wasn't good then. But aside from that time, the market was really good, right? Up until the one-year mark, we see an incredibly strong market. But interestingly, at the three-year mark...

I don't know why this is happening. It might be because the policies are continuing and their effects are starting to show, or it could just be a coincidence. For now, I can't say for sure, but it seems that the first year looks very promising. So, we might think that we can aim for the first year in the U.S. market. Then, should we look at the S&P 500 or the Nasdaq? Yes, I've been very interested in the Nasdaq lately. It's the same with tech stocks. If you look at the Nasdaq over the past year, it was negative at one point, and then when we look at the year after the presidential election, excluding the time of Bush, it has fully recovered. This shows how significant the presidential election is as an event in the U.S. Of course, there are some variables in the one-month and six-month periods.

There may be some fluctuations in the middle due to the market's ups and downs, but when looking at a one-year period, there are definitely opportunities in the U.S. market. So, the presidential election event is something we should definitely take advantage of, as it comes around every four years. You could consider it a significant event. If we invest temporarily in the U.S. market aligned with the presidential election cycle, we are bound to make a profit. Of course, there is a risk of a major bubble bursting, but aside from that, it seems promising. I was curious about how things would be in our country. I wondered if there would be some changes leading up to our presidential election, so I looked into it. If you look at the KOSPI, it’s not that bad, but it’s not particularly good either.

A year ago was still relatively good. But look at the first year of the presidency; the results of our country's presidential election in the first year are not very good. This is especially true considering that during President Kim Dae-jung's time, it was the IMF era, so we can consider that an exception. During President Lee Myung-bak's time, and even during President Park Geun-hye's time, things were not particularly bright either. There weren't many positive indicators. So, the correlation between our country's presidential elections and the market is not that significant. Especially if you look at the KOSDAQ in the first year, there are more blue signals than red ones. One might think that the presidential election in our country is not very related to the market. But the next data is really interesting. This isn't the end; it’s not that the stock market in Korea is unattractive. No, no, the next data is truly fascinating. So, I...

I was a bit shocked when I saw this, and I thought I really need to bring this up and talk about it. So, if you look at the KOSPI index after the U.S. presidential election, it looks somewhat different, right? If you look at the previous year, especially during Bill Clinton's term, there were significantly more negative trends. What this means is that due to the presidential election issues, money flows into the U.S. market. In other words, investors in Korea are moving their money to the U.S. market. It seems that the U.S. market is expected to perform well because of the election issues, so the money keeps flowing in. Now, look at the next year. In Korea, aside from Bill Clinton's re-election, we see declines. This was also during the IMF crisis, right? Excluding that period, what this means is that when the U.S. presidential election happens, the presidents release money, and the benefits of their policies are seen globally. Money is being injected into the economy.

In the past, there was a sense of anticipation to enter the U.S. quickly, but first, after the money is released, the benefits are seen together. You can feel that, right? Right. Earlier, when we looked at the Korean presidential election, it was all negative, but when money is released in the U.S., it rises like this a year later. It's shocking, right? But the second and third years are a bit different. In the third year, while everything in the U.S. had risen, it was different. So, in the first year, it's certain, but as we move into the second and third years, variables start to emerge, and differences begin to appear. The U.S. continues to grow, but if our country doesn't grow as much, then it also moves according to corporate performance. Nevertheless, in the first year, there are definitely opportunities for both our country and the U.S. So, what about the KOSDAQ? Since the KOSDAQ is also a tech stock, money is being released.

If you save money, it might not rise that much, right? It's the same. You need to have at least 68%. Excluding the IT sector, everything else is the same. Even during the IT sector, it seems like we managed to hold at 17.5%. If you look at it this way, it makes sense. So, the previous year's data is meaningless, right? Looking at the previous year, as I mentioned earlier, money is being sucked away in the same way, but if you look at the following year, it's different. Wait a minute, looking at this table, I think everyone says that U.S. stocks are doing well right now. Before the presidential election, U.S. stocks rise, and they remain up a year later, right? But our country's stocks drop in the previous year. You showed all the red lights, right? So, after the election, a year later, don't our country's stocks rise significantly? So, isn't it a good time to buy Korean stocks? Korean stocks are also doing well, right?

However, if you look at the U.S. market, the cumulative return is not from the previous year to the first year; rather, it is the return from the previous year and then the return for the year after the presidential election. That's why everything looks good. It's not cumulative, but for the second and third years, we are talking about the returns for that specific year. So, you can say that the returns during this period were all good. In the case of our country, the return in the first year can definitely be good. However, since the return from the previous year was not good, it might actually create a bit more optimism that it could be even better. Except for the collapse during the IT bubble, our market has generally been doing quite well. If you look at it, even in the case of the KOSPI, despite the collapse of the IT bubble, the return in the first year was...

It has risen. Oh, I see. So, at that time, it was different. The KOSPI and KOSDAQ had fallen, but the KOSPI was still better. So, if you look at it, even when there was a minus, afterwards, regardless of that minus, it went up. Even if there was a plus, it still went up. I think that’s really good. It seems like a good time for stock investment is approaching, whether in the U.S. or Korea. 

So, the premise is one thing: when we had a minus, we need to look at what was there. There was the IT bubble and the financial crisis, right? So, what this means is that we can do without a global crisis, right? As long as we keep that premise in mind, we should bet on our market. There may be fears due to war and geopolitical issues, but that doesn’t mean there’s currently a financial crisis that is being contained, right? Not yet.

I can't see it, but let me share a few things. In the end, the crisis is simple if it doesn't exist. So, the question is whether it will ultimately not exist. First, let's look at the consumer confidence index from the Conference Board. The U.S. economy is holding up well based on consumer spending. If people are confident, they will spend. The consumer confidence index indicates whether people are likely to spend. If they are expected to spend, then actual consumption will occur. This means that consumption can remain robust. In fact, if we look at the Conference Board's consumer confidence index, it is above 100, which is the baseline. It has exceeded the forecast three times in a row. This suggests that the U.S. market is doing well and the economy is in decent shape. Indeed, U.S. consumption remains strong.

In a stable state, can the U.S. market collapse rapidly? The answer is no, at least not yet. It is not that the performance will collapse. Of course, there could be credit risks arising from high interest rates, but looking at this alone, the answer is no. 

Next, when we look at the ISM Business Index, it is showing some signs of decline. It is now falling below 50. The ISM Non-Manufacturing Index reflects how purchasing managers in the service sector view our market and the service market. This index is indeed showing some decline. However, that does not mean the market is in a situation where it will collapse rapidly. 

While it may temporarily dip, there are also instances where it rebounds. This decline cannot be predicted based on just one issue. Another point to consider is the GDP growth rate of the U.S. GDP.

Well, it's quite a big deal that things are looking so good. The GDP for the first quarter is now in the 1% range, and for the second quarter, it has surpassed 2%. So, with this growth, it's still a bit ambiguous to say that the U.S. is going to collapse. Right? However, the rising unemployment rate in the U.S. is still a concern. The unemployment rate has now exceeded 4%, reaching 4.1%. Ultimately, if the unemployment rate rises, there is a worry that people won't be able to consume. So, we need to keep an eye on this and be cautious about the unemployment rate rising too quickly. On the other hand, if the unemployment rate continues to rise, the U.S. might increase interest rates and shift its fiscal policy towards job creation initiatives.

It's not necessarily a bad thing that there is a capital. You're doing very well. Yes, so as the unemployment rate rises and the ISM non-manufacturing index for consumer spending has decreased, it is indeed true that this has raised interest rates and expectations. If you look at it, originally our expectations for interest rates this year were at one level, but now they have dropped to three times in September, November, and December. Ultimately, as the unemployment rate rises and the economy slows down, there is a growing belief that the Federal Reserve will lower rates. Additionally, since inflation is currently decreasing, the lowering of interest rates means that liquidity will be released. Therefore, it can be concluded that the U.S. market will not collapse. Furthermore, we should consider Trump's policies. Looking at his policies, there are concerns about inflation.

There may be some possibilities, but ultimately, it is very clear that Trump is coming in and releasing money. The biggest factor is tax cuts. Looking back at Trump's first term in 2016, the tax cut policy had the most significant impact. A representative example of this is the reduction in corporate taxes. When corporate taxes are lowered, corporate profits improve immediately. As corporate profits increase, the intrinsic value of companies rises, leading to continuously good stock prices during Trump's administration. 

Additionally, by imposing tariffs, the U.S. is keeping in check manufacturers in the Chinese market and the global market, which raises concerns about inflation. However, the performance of U.S. companies could improve. Furthermore, there is a focus on expanding infrastructure investment, which means that investing in infrastructure ultimately stimulates the U.S. economy.

Overall, while it may stimulate inflation, there are still policies being implemented to support the economy, so we can say that the current situation is not likely to take a significant downturn. Many people are curious about the impact of President Trump's wealth tax and the potential for tariffs of 50% or 25% on not just China, but globally. There are concerns that if interest rates rise and money is injected into the economy, import prices will increase, leading to inflation in the U.S. This could result in a brief improvement in the early part of next year, followed by a significant economic downturn as interest rates rise. This line of thinking may seem simplistic, but it is prevalent. If Trump is elected, is there a possibility that this scenario could unfold? I share those concerns; inflation is definitely a worry. However, I believe we can alleviate those concerns from two perspectives.

What I mean is that one aspect is the performance of American companies. Recently, Microsoft announced its earnings today. This video will be released later, but during the earnings announcement, do you know what they kept mentioning? Was there a key point? They said that the strong dollar has negatively impacted their earnings. Originally, with a strong dollar, earnings should be higher, but that's not the case; a strong dollar actually leads to lower earnings. As the dollar value decreases, it affects their performance. So, when the dollar is strong, our country's performance looks good, but from the perspective of American companies, if, for example, a payment of 10,000 won is made from our country, the amount in dollars decreases, right? From their standpoint, it's a loss. So, what Microsoft is saying is that they are experiencing a 1% point loss in revenue.

Ah, I see. So, does that mean that all American companies engaged in global business are like that? Right, it's the same situation now. So, when the dollar weakens, it means that they can still increase by 1% or 2% just by staying still. That's right. So, there are positive aspects in the performance of American companies. And what Trump does best are two things. What are those two things? Do you know where Trump is originally from? I understand he is of German immigrant descent. No, aside from that, do you know that there is a Trump Tower near Yeouido or Yongsan? Yes, I know about that. Trump is a real estate person. That's right; he originally comes from a real estate background, a conglomerate. So, he manages the supply of real estate very well. Managing the supply of real estate means...

It means that inflation is well managed. Yes, that's why it can prevent inflation based on real estate assets. That's one aspect. Next, this person implements very strong energy policies. They say that we need to export energy, and they are heavily investing in energy, including shale gas. If oil prices stabilize, right? Instead of going green, we can extract a lot from our country and bring it in at a stable and low cost. Right? It reminds me a bit of the economic boom in the 1980s. If that happens, it can reduce the burden of rising import prices. If energy prices themselves go down, right? Yes, we can lower energy prices themselves. So, of course, there will be some impact on inflation, and I think that too.

First of all, when looking at the period before and after the presidential election, or rather before the interest rate cuts, I think the slowdown in inflation will be slower than expected. Therefore, I believe the pace of interest rate cuts will be slower than the market anticipates. I expect there will be a shock during that time, which is why I am suggesting we should be cautious around September and October. We need to be careful in September and October. However, as we saw in the chart, there will definitely be opportunities after November. If we can generate cash before then, we could seize a significant opportunity. So, are you saying that we should take a somewhat conservative approach now and gradually build up cash until September and October? Yes, I believe this is exactly the right time for that. If we manage to create cash during that period, we will have ample opportunities. However, those opportunities are quite...

Interestingly, you can see it in electronic disclosures. Oh, you can really see it in electronic disclosures; it's quite fascinating. It's something you can't deny. First, let me show you the impact when a strong collaboration between policy and disclosures emerges. Please show us, writer. Also, you recently published a book titled If You Don't Know Electronic Disclosures, Never Invest in Stocks. If I read this book, will I be able to follow everything you are about to introduce? Yes, that's right. This is something you can easily follow. If you put in a little effort, you can definitely keep up. So, it's worth taking a look; it's very interesting. First, let me explain why policy and disclosures have collaborated. I want to buy power equipment.

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