Two weeks ago, Lehman Brothers went bankrupt and Merrill Lynch was taken over by Bank of America in a 50 billion dollar deal, sending global markets into a slump. The fall of these two giant investment banks was probably more than anyone will see in one day of financial history since the great crash of 1929. South Korean market was not an exception. The Korea Composite Stock Price Index lowered about over five percent the day that the investment banks got into trouble. The talk of the week and the headlines were filled with the crash in the Wall Street stock market. University students who have jumped into stocks are also poring over data and computers to find what to do next.
An investment boom has also spread among university students since a few years ago. Investment clubs have been started at Ewha, raising high profits and academic clubs researching about stock investments and funds are also popular. Due to the crisis however, many students into stocks have lost a huge amount of money, considering the size of their wallets. Panic and fear started to dawn upon the students. President Lee Myung-bak said in a meeting a few days after the dramatic falls in market prices, Korean people tend to be effected more psychologically in a crisis like this.
Thus, university students also need to keep their calm, look back on our investment behaviors and find a way to solve this crisis that has dawned upon them.
To begin with, students should not act irrationally just because they are afraid about the unpredictable future. Many analysts state that history has shown an improvement or a rebounding in the market is likely to follow up after a rapid fall like this. Students should not act out of impulse but do thorough research on the investments they want to make. The important point here is to look on the long term and not the short term.
Moreover, a situation like this may be devastating in some aspects, but it also can act as an opportunity for some students who plan on investing with limited cash. The low stock prices are a chance for students to get their hands on some potential high profit stocks. If investing on stocks do seem a bit too risky, student can turn their eyes to investment fund heavily oriented to stocks. The situation like this will be an opportunity for students to look at other aspects of the stock environment with a new light.
The key here to overcome this situation is not to act out of impulse, but doing thorough research to catch the opportunities that might await them in the future. South Korea was recently advanced to one of the 'developed countries' from an 'emerging advanced countries' by the Financial Times Stock Exchange. This is a prominent advancement for Korea.
Students who have lost money due to the current crisis or has become hesitant to invest more on stock should come out of their financial phobia. Although the situation does seem bleak and the Wall Street is still expecting more difficulties, there is always a lesson to learn when we stumble upon an obstacle. Fasten your seatbelts tight and drink in a deep breath to handle the crisis in a rational and logical manner.
Ewha Voice
evoice@ewha.ac.kr