What the South Korean stock selloff taught me about having a safety buffer, position sizing and using the Four Pots to protect our long-term goals.
What happened?
Sometime in May this year, someone suggested that I buy a leveraged product linked to a South Korean technology stock.
Artificial intelligence (AI) related stocks were performing strongly back then, and the product offered the possibility of earning multiple times the stock’s daily return.
However, it did not fit what I was looking for at the time. I had been more focused on income opportunities within my portfolio, and I was not comfortable taking on the additional risks that came with leverage, so I decided not to invest.
A few months later, the South Korean stock market fell sharply. In one online trading forum, a South Korean investor reportedly wrote, “Give me my money back.”
I can understand why an investor would feel that way....