"It is neither investing nor speculation; it is gambling."
Warren Buffett, Chairman of the Board at Berkshire Hathaway and known as the 'God of Investing,' has warned that the market is turning into a gambling den due to the frenzy surrounding ultra-short-term investments.
According to CNBC on the 15th (local time), Chairman Buffett pointed out that the market is overheating as speculative funds pour into leveraged investments and ultra-short-term options driven by expectations for the artificial intelligence industry.
Buffett criticized the current market, stating, "There are times when an unbelievable number of great opportunities come all at once, but more often, it is a matter of luck to find even one company worth investing in every few years, and that kind of market is actually the norm."
He further remarked, "In a market where everyone prefers to gamble, it becomes much harder to find good, undervalued companies."
As if wary of the overheated market, Berkshire, led by Buffett, has maintained a net selling stance on stocks for 14 consecutive quarters.
On the other hand, the company is increasing its cash reserves. As of the end of the first quarter of this year, Berkshire's holdings in cash and short-term Treasury bills reached a record high of 586 trillion won.
The KOSPI has also been fluctuating recently due to the ultra-short-term investment frenzy.
Volatility has increased as trading volume has flocked to single-stock leveraged products for Samsung Electronics and SK Hynix, which reflect twice the price volatility of the underlying stocks.
Circuit breakers, which had only been triggered 6 times in 27 years, have been activated 5 times since the launch of single-stock leveraged products in May. Similarly, sidecars, which have been triggered 37 times this year, saw 19 of those instances concentrated after May.
Following criticism that these products are fueling volatility, the government announced supplementary measures for single-stock leveraged products on the 16th.
The minimum deposit required for leveraged investments will be raised from 10 million won to 30 million won, and the policy of recognizing up to 70% of stock holdings as deposits will be changed to accept only cash.
The trading unit, which currently allows trading by the single share, is also planned to be expanded to 20 shares. The government stated that it would consider additional measures if necessary.
Reported by Kim Jin-u | Video by Ryu Ji-soo | Graphics by Lee Jeong-ju | Produced by SBS Digital News
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