South Korea’s AI Bubble Just Popped — Transcript

Full transcript

1. 0:00So, just 3 weeks ago, South Korea had
2. 0:02the best-performing stock market in the
3. 0:04world.
4. 0:06The stock market is something called the
5. 0:08KOSPI, and it's gone up almost 200% in
6. 0:11the last 12 months.
7. 0:13Compared to other stock markets like the
8. 0:15US's S&P 500, which only made 24%, South
9. 0:19Korea was just on another level.
10. 0:21At one point this year, one of their
11. 0:24companies, Samsung, was up over 500% and
12. 0:27SK Hynix was up over 1,000%.
13. 0:31That's basically a 10x on your money,
14. 0:34which is just unheard of. Now, here in
15. 0:36the US, our equivalent of the stock
16. 0:39market is something called the S&P 500,
17. 0:42represented by ETFs like this one, VOO.
18. 0:45And inside of this ETF, the top 10
19. 0:48companies represent 36% of this index,
20. 0:53which historically is a very high
21. 0:56concentration.
22. 0:57But for South Korea's KOSPI, just two
23. 1:01companies alone, Samsung and SK Hynix,
24. 1:04represent over 56%
25. 1:08of their whole stock market. And that's
26. 1:11all mostly thanks to regular people, or
27. 1:15retail investors, that have just
28. 1:17borrowed money to invest into the stock
29. 1:19market. And that's roughly 14 million
30. 1:23retail investors. They've put their
31. 1:25savings and a huge amount of borrowed
32. 1:27money into those two stocks.
33. 1:30And then,
34. 1:31in just 21 days,
35. 1:33everything started to collapse. The
36. 1:36KOSPI dropped 25%,
37. 1:38and because of that, 1.2 million
38. 1:41accounts, which works out to be one in
39. 1:44every 30 people in the country, got hit
40. 1:47with something called margin call
41. 1:48thresholds. This is what happens when a
42. 1:51stock goes down far enough to trigger
43. 1:53the loan on the borrowed money to
44. 1:54liquidate, or basically be forced to
45. 1:57sell off their stock investment, even if
46. 2:00it's at a loss.
47. 2:02And that's why over 3 trillion won in
48. 2:04investments were liquidated, which means
49. 2:07they were automatically sold by brokers
50. 2:10while Korean investors couldn't do
51. 2:12anything about it.
52. 2:13>> So, I mean some massive massive
53. 2:14correction followed. So, could that
54. 2:16happen in the US? Yes.
55. 2:18>> 320,000
56. 2:20accounts were just wiped out, some of
57. 2:22them overnight. It got so bad that the
58. 2:25president of South Korea held an
59. 2:27emergency intervention for their stock
60. 2:29market.
61. 2:30Now, you might be thinking, "Okay, well,
62. 2:31that's unfortunate for South Korea.
63. 2:33That's kind of their problem and it
64. 2:35doesn't affect me."
65. 2:36But, South Korea is doing the exact same
66. 2:40thing as the United States, right?
67. 2:42They're both running the same version of
68. 2:44the same technique, but Korea's just
69. 2:46doing a faster, smaller version of the
70. 2:49same leverage mechanism the US is.
71. 2:52Which means what happened to South
72. 2:54Korea, and what is happening to their
73. 2:56stock market right now as you're
74. 2:58watching this video, might actually be a
75. 3:01preview of what's about to come to the
76. 3:03US. So, in today's video, I want to show
77. 3:06you exactly what's happening and how
78. 3:08this could affect investors here in the
79. 3:10US. So, with that said, let's get into
80. 3:12it. Hi, my name is Andre Jik. Hope
81. 3:14you're doing well. Come for the finance
82. 3:16and stay for South Korea's market crash.
83. 3:19So, let me explain what's happening
84. 3:20first and how it's all kind of happening
85. 3:23in parallel to the United States. So, in
86. 3:26South Korea, there's about 51 million
87. 3:28people. 14 million of them, or one in
88. 3:32four, are what's called retail
89. 3:34investors. Now, they call themselves
90. 3:36ants because individually, one ant is
91. 3:39small and they don't matter, but 14
92. 3:41million ants working together,
93. 3:43well, they can move the whole market.
94. 3:45Make sense.
95. 3:46After last year, that's exactly what
96. 3:48they've been doing.
97. 3:49Why?
98. 3:50It's because South Korea has a cultural
99. 3:53expectation that by a certain age,
100. 3:56you're supposed to have a good job,
101. 3:58you're supposed to own a home, you're
102. 3:59supposed to start a family.
103. 4:01And the problem is housing in South
104. 4:03Korea has become so expensive that for a
105. 4:06lot of young people, owning a home
106. 4:08stopped being a realistic goal.
107. 4:10>> In South Korea, there's an expectation
108. 4:12that at certain age you want to have a
109. 4:14good job, you want to own a house, and
110. 4:16then you want to start a family. Young
111. 4:19people who feel like they're out of to
112. 4:22own a house are starting to invest in
113. 4:24stocks so they can start to build
114. 4:27wealth.
115. 4:31>> So a whole generation was like, okay,
116. 4:33well if I can't build wealth through
117. 4:35owning a house,
118. 4:36the stock market is the only thing I can
119. 4:38do. And one of their biggest finance
120. 4:40influencers actually said that their
121. 4:42last chance to build wealth is the stock
122. 4:44market, and if they don't succeed,
123. 4:46they're just going to get left behind.
124. 4:47So about 14 million people also think
125. 4:50this way, which is why they don't just
126. 4:52invest, they go all in with leverage.
127. 4:56This is where people take out personal
128. 4:57loans to buy stocks. They borrow against
129. 5:00their salaries, and a huge number of
130. 5:02them
131. 5:03didn't even buy regular stocks. They buy
132. 5:05what are called leveraged ETFs. Now, a
133. 5:09leveraged ETF is a mutual fund that
134. 5:12multiplies the effects of whatever's
135. 5:15happening in the stock market. For
136. 5:17example, a 2x fund means if the stock
137. 5:20market goes up 1%, you make 2%. A 3x
138. 5:25fund means you make 3%, which sounds
139. 5:28amazing. But the catch is that it also
140. 5:30works exactly the same in reverse,
141. 5:33right? There was one investor in a
142. 5:34documentary about this who wouldn't even
143. 5:36show her face on camera because her
144. 5:38family didn't know how much leverage she
145. 5:40was using. Her portfolio was worth over
146. 5:43$650,000, and she was up 150%,
147. 5:47and her biggest holdings were these
148. 5:49leveraged ETFs.
149. 5:51At the peak, Koreans invested about 10
150. 5:54trillion won into leveraged funds
151. 5:56betting on just one company.
152. 5:59It got so bad, even South Korea's
153. 6:02government that allowed them this said,
154. 6:05"Ah, we should probably not have done
155. 6:06that, right?"
156. 6:08And what all these people were investing
157. 6:09in were basically these two stocks,
158. 6:12Samsung and SK Hynix. These two
159. 6:14companies make up more than half of the
160. 6:17whole Korean stock market, the KOSPI.
161. 6:19Remember that for context, the US's S&P
162. 6:22500 has 500 companies. Korea's index
163. 6:26technically also has hundreds, too, but
164. 6:28in practice,
165. 6:30over half of that stock market is made
166. 6:32up of just those two stocks. So,
167. 6:34basically, the Korean stock market kind
168. 6:36of trades like a volatile penny stock.
169. 6:38Now, okay, hold on. Why did those two
170. 6:42stocks go up so much? And why they went
171. 6:44up is because of AI and memory, because
172. 6:47AI data centers need a lot of memory
173. 6:49chips, which are basically specialized
174. 6:51semiconductors that store and feed
175. 6:53information to AI processors. And the
176. 6:56two companies that dominate that market
177. 6:59are Samsung and SK Hynix.
178. 7:02This is where the US stock market comes
179. 7:05in.
180. 7:05Companies like Microsoft, Google,
181. 7:07Amazon, Meta, they have spent $376
182. 7:11billion on AI infrastructure in 2025.
183. 7:14And this year in 2026, they're on track
184. 7:16to spend 725
185. 7:19billion.
186. 7:20And a huge chunk of that money has gone
187. 7:22straight into South Korea.
188. 7:24So, all of these retail investors are
189. 7:27not just betting on Korean companies.
190. 7:30Korea as a country is betting on
191. 7:33American AI spending, cuz that's what's
192. 7:36holding up the world's stock market.
193. 7:38That is how, by July, we had the most
194. 7:42concentrated major stock market in the
195. 7:44world held up by leveraged retail
196. 7:47investors betting on one trade
197. 7:49continuing forever. That's what
198. 7:51happened. And now this is sort of
199. 7:52starting to go in the other direction
200. 7:55where people are losing a lot of money.
201. 7:58Okay, so then the question is well, what
202. 8:01actually popped it? What's forcing all
203. 8:03these people to sell off their stocks?
204. 8:06And the answer is
205. 8:08we did, the United States. Here is how.
206. 8:11Now before I explain that, have you
207. 8:12noticed recently that you're getting a
208. 8:14lot more phone calls and emails and spam
209. 8:16all throughout the day? That's because
210. 8:19there are hundreds of companies called
211. 8:20data brokers that are legally collecting
212. 8:22our personal information, our name, home
213. 8:24address, phone number, even our
214. 8:26relatives, and selling it to anyone with
215. 8:28a credit card. That's why this segment
216. 8:29is sponsored by DeleteMe. I've
217. 8:31personally been a member since April
218. 8:322024 and they have scanned thousands of
219. 8:34listings and removed over 68 instances
220. 8:37of someone selling my info. They have
221. 8:39easily saved me dozens of hours trying
222. 8:41to find this all myself and an estimated
223. 8:4314 and a half hours of trying to get
224. 8:45this info removed. Thankfully DeleteMe
225. 8:47just runs in the background
226. 8:48automatically and I don't have to do
227. 8:50anything. They were just named the
228. 8:51number one data removal service by
229. 8:53Wirecutter and real people are actually
230. 8:56doing the removal work. It's not some
231. 8:57outsourced third party. It'll help
232. 8:59protect you from the risks of your data
233. 9:01being out there in the wrong hands and
234. 9:02it takes about 5 minutes to set up. The
235. 9:04link is down below or you can go to
236. 9:05joindeleteme.com/andre20
237. 9:08to get 20% off. Thank you to DeleteMe
238. 9:09for sponsoring this segment and now
239. 9:11let's get back to it. So here's how the
240. 9:13US has sort of popped the bubble in
241. 9:14Korea.
242. 9:15In late June, chip stocks in the US
243. 9:18started selling off. That's because
244. 9:20investors were getting nervous ahead of
245. 9:22earnings from a very important company
246. 9:24for the AI story, which is Micron. That
247. 9:27is America's biggest chip maker and it's
248. 9:30also a competitor to Samsung and SK
249. 9:32Hynix. And when US memory stocks started
250. 9:35going down,
251. 9:37the same thing started to happen in
252. 9:38Korea, except way harder. Right,
253. 9:40remember the KOSPI is not a diversified
254. 9:42market. It's a two-stock stock market.
255. 9:45So, in one session, the KOSPI dropped
256. 9:48something like 4.6%.
257. 9:50And then a week later, Samsung and SK
258. 9:52Hynix both went down more than 9% in
259. 9:54just one day.
260. 9:56And then came the day that Koreans are
261. 9:58now calling Black Tuesday, which is
262. 10:00where the KOSPI went down more than 10%
263. 10:03in just a day.
264. 10:05And that is one of the worst drops in
265. 10:06the whole history of the Korean stock
266. 10:09market.
267. 10:10For context, a 10% one-day drop in the
268. 10:13US stock market, that would be the third
269. 10:16worst day in American history, only
270. 10:18behind 1987 and the Great Depression.
271. 10:22Now, in a normal market, when there's a
272. 10:24sell-off,
273. 10:26the drop usually ends when the seller
274. 10:29stops selling. Make sense, right? But
275. 10:32this one did not stop there, because
276. 10:35when a stock market is built on borrowed
277. 10:37money, aka leverage,
278. 10:40nobody needs to sell. The selling
279. 10:42happens automatically.
280. 10:44How?
281. 10:45Well, it's because when you buy stocks
282. 10:47with borrowed money, and those stocks go
283. 10:50down to a certain price level,
284. 10:52your broker sends you a margin call,
285. 10:54which is basically where they say, "Hey,
286. 10:56deposit more cash by tomorrow morning,
287. 10:58or we sell all your stocks for you."
288. 11:00And if you don't have the money, the
289. 11:02broker sells your shares at whatever
290. 11:04price.
291. 11:05Okay, they don't wait for a better price
292. 11:07in the market. They do not care that
293. 11:08you're down 40%. They just do it. Now,
294. 11:11all of this forced selling pushes the
295. 11:13stock prices down even more, which
296. 11:16triggers more margin calls for the next
297. 11:18group of investors who maybe got in a
298. 11:20little earlier, which pushes the price
299. 11:22down even more, right? Which triggers
300. 11:25more margin calls. You get the idea.
301. 11:27It's a doom loop.
302. 11:29Now, under normal conditions, about 2%
303. 11:31of Korean margin accounts get force
304. 11:33liquidated. But during this crash, that
305. 11:36number went higher than 10%, which is
306. 11:38about five times the normal rate. And
307. 11:40that is also because
308. 11:42all of these leveraged ETFs made
309. 11:45everything so much worse.
310. 11:47Because if you're holding a 3x leveraged
311. 11:50fund on
312. 11:52a company like SK Hynix, for example,
313. 11:54and the stock drops 10% in a day,
314. 11:57well, you just lost 30%. Right? But it's
315. 12:00even worse than that.
316. 12:02Because of how these funds work, they
317. 12:04have to rebalance every day, which means
318. 12:07at the end of a big down day, the fund
319. 12:10has to sell into a falling market to
320. 12:13maintain its leverage ratio.
321. 12:15So, retail investors were getting
322. 12:18liquidated and the funds were force
323. 12:21selling on top of them, right? And every
324. 12:24sale made the next sale more and more
325. 12:26likely.
326. 12:28And this didn't even stay inside of
327. 12:30Korea, because over the next two days,
328. 12:33more than 600 billion dollars got erased
329. 12:35from Asian markets.
330. 12:37Japan went down more than 4%. Taiwan
331. 12:39went down, Hong Kong, China. At one
332. 12:43point, the only thing that stopped the
333. 12:45Kospi from going down even more
334. 12:48was that the market was literally closed
335. 12:50for a national holiday.
336. 12:52It got so bad that the president, who by
337. 12:55the way was the same person who spent a
338. 12:57year encouraging people to get into the
339. 12:58stock market,
340. 13:00they called an emergency meeting to try
341. 13:01to stabilize the market.
342. 13:04But the truth is
343. 13:06is that even right now, the leverage is
344. 13:08still there.
345. 13:10So, that's what's happening in South
346. 13:11Korea. But now I want to show you how
347. 13:13all of this could end just as badly for
348. 13:17the US stock market as well. And how
349. 13:18this could end badly for the US is
350. 13:20because of how much margin debt our
351. 13:23stock market has. And here it is. This
352. 13:26is all the borrowed money Americans are
353. 13:29using to buy stocks measured as a
354. 13:31percentage of the whole US economy. So,
355. 13:34look at the little red arrows on this
356. 13:36chart. Every single one of them marks a
357. 13:38moment in history. For example, in June
358. 13:411968, that was right before the market
359. 13:44lost a third of its value. December 1972
360. 13:48was right before the 1973 crash. August
361. 13:521987
362. 13:54was 2 months before Black Monday, the
363. 13:56worst day in stock market history. Then
364. 13:59March 2000, the exact month the dot-com
365. 14:02bubble peaked. Then July 2007,
366. 14:06that was months before the financial
367. 14:08crisis. January 2018, August 2021, both
368. 14:13followed by pretty big corrections. So,
369. 14:16every time US margin debt went to an
370. 14:18extreme, a crash happened almost right
371. 14:21after, every single time.
372. 14:24Now, look at where we are today.
373. 14:27As of June 2026, US margin debt just hit
374. 14:30roughly 4 and 1/2% of GDP. That is the
375. 14:34highest level ever recorded in American
376. 14:37history. This is higher than the dot-com
377. 14:40bubble, higher than 2007, higher than
378. 14:43even the 2021 meme stock everything
379. 14:46bubble, and it's higher by a lot.
380. 14:49This June number, by the way, was
381. 14:50released this past week. The US
382. 14:53basically printed the biggest margin
383. 14:56debt reading of all time.
384. 14:59But it gets even worse because that
385. 15:01number is actually lower than what
386. 15:04reality really is.
387. 15:06And that's because the official margin
388. 15:09data only tracks one kind of borrowing,
389. 15:12which is traditional margin loans at
390. 15:15brokerage accounts.
391. 15:16What it doesn't show us
392. 15:18are leveraged ETFs,
393. 15:20options, portfolio margin, private
394. 15:23credit,
395. 15:25all the modern new ways that people take
396. 15:28on leverage, right? Which doesn't
397. 15:30actually show up in the official
398. 15:32statistics, so I couldn't show you them
399. 15:33here. So, those leveraged ETFs that blew
400. 15:36up Korean investors,
401. 15:38they're the same ETFs we have. They're
402. 15:41doing the same things with hundreds of
403. 15:43billions of dollars in them, including
404. 15:462x funds on single stocks like Nvidia
405. 15:48and Tesla. We have zero-day options
406. 15:51where people gamble on what the stock
407. 15:54market does in the next 6 hours. They're
408. 15:56all trading at record volumes.
409. 15:59The stock market has turned into a
410. 16:01literal casino at this point.
411. 16:04So, this chart actually shows the floor
412. 16:07of how much leverage might be in the
413. 16:08system.
414. 16:10In reality, there's probably a lot more.
415. 16:14Now, also think about what's actually
416. 16:16holding up the US stock market right
417. 16:18now.
418. 16:19The top 10 stocks are 36% of the S&P
419. 16:22500. And almost all of them are making
420. 16:26the same bet. That bet is on AI.
421. 16:30Nvidia sells the chips, Microsoft, Meta,
422. 16:33and Google buy the chips, Micron
423. 16:36supplies the memory,
424. 16:38and they pass all this money back and
425. 16:40forth to each other, which is
426. 16:41artificially boosting their earnings,
427. 16:43which makes this whole growth story
428. 16:46believable.
429. 16:47But, what's really propping up the whole
430. 16:50stock market right now is AI spending.
431. 16:53It's companies like Microsoft, Google,
432. 16:55Amazon, and Meta spending 3/4 of a
433. 16:59trillion dollars a year,
434. 17:01which happens to be the revenue of
435. 17:03Nvidia, of Micron, and of the whole AI
436. 17:06trade, right? One company's spending is
437. 17:10another company's earnings. It's kind of
438. 17:12a loop. Right? Jim Chanos, the guy who
439. 17:14called Enron, said that the returns on
440. 17:16all this spending are already going
441. 17:18down.
442. 17:19>> But basically, it's gone from as a group
443. 17:2240%
444. 17:24a year and a half ago to about 20%
445. 17:26today.
446. 17:27And and if the spend keeps up at this
447. 17:31kind of rate, it's going to be moving
448. 17:33toward 10%. And then you're going to
449. 17:35have real issues.
450. 17:36>> A year and a half ago, hyperscalers were
451. 17:38earning about 40 cents of operating
452. 17:40income on every incremental dollar they
453. 17:43invested.
454. 17:44Today, it's about 20 cents.
455. 17:46And it's going towards 10.
456. 17:48At some point, if not already,
457. 17:51some CEO of a trillion-dollar company
458. 17:54will ask,
459. 17:55"Does it make sense for our company
460. 17:58to pay this much for AI if we're only
461. 18:01making a couple billion dollars on it?"
462. 18:04For the US, right, it's OpenAI and
463. 18:06Anthropic. They're the AI story, and
464. 18:09they still lose tens of billions of
465. 18:12dollars a year.
466. 18:13But they make up 70 to 80%
467. 18:17of all the AI compute demand.
468. 18:20So, the whole pyramid structure kind of
469. 18:23looks like this.
470. 18:24Unprofitable AI companies justify
471. 18:27hyperscaler spending, right? Justifies
472. 18:30chip earnings, justifies the stock
473. 18:33market, which is being bought with
474. 18:35record amounts of borrowed money. Right?
475. 18:38That's the whole
476. 18:39structure.
477. 18:40And where it starts to look like this
478. 18:42could be the beginning of the end,
479. 18:45is companies are now flooding the market
480. 18:46with new IPOs.
481. 18:48In 2026,
482. 18:50IPOs have come to market at over 12% of
483. 18:53GDP in post-IPO market cap.
484. 18:57Now, the previous record was the peak of
485. 18:59the dot-com bubble at just 5%.
486. 19:03We're at more than double the 1999
487. 19:06level.
488. 19:07Now, historically, when companies create
489. 19:10this many IPOs,
490. 19:12That usually means insiders think that
491. 19:15prices are as good as they're ever going
492. 19:17to get for a really long time. Which is
493. 19:21why they're selling to us, to the retail
494. 19:24people.
495. 19:25So then the question is, well, is there
496. 19:27some kind of a warning sign that we can
497. 19:29watch for to know when the bubble might
498. 19:32really pop? And as it turns out, there
499. 19:34is one number we can look at right now,
500. 19:36and that number is capital expenditures
501. 19:39of specifically four companies,
502. 19:42Microsoft, Google, Amazon, and Meta.
503. 19:44That is it. That is the one number
504. 19:47that's holding up the whole global stock
505. 19:49market. Now, think about it like this.
506. 19:52The whole Korean stock market crashed
507. 19:55because investors got nervous that
508. 19:56memory spending might slow down.
509. 19:59Not that it did slow down, just that it
510. 20:01might. Now, imagine what happens when
511. 20:04one of these four major companies, on an
512. 20:06earnings call, actually says, "We're
513. 20:09reducing our AI capital expenditures."
514. 20:11Right? That that would be really bad.
515. 20:13Because the only reason these companies
516. 20:16have been spending this insane amount of
517. 20:18money
518. 20:19is only because the stock market keeps
519. 20:22rewarding them for it. Every time their
520. 20:24CapEx spending goes up,
521. 20:26their stock goes up as well.
522. 20:29And that's starting to change. Right?
523. 20:30They're saying that the first
524. 20:31hyperscaler to cut back on AI spending
525. 20:35will be rewarded by the market because
526. 20:38investors are getting tired of just
527. 20:41investing money with no returns on AI
528. 20:45income. Right? And when saying that
529. 20:47they're lowering their spending and the
530. 20:49market is rewarding them for it, instead
531. 20:51of punishing,
532. 20:52like that is when this unwind could
533. 20:54start to happen.
534. 20:56Now, this has actually happened before.
535. 20:58In the year 2000, Coca-Cola needed
536. 21:0110,000 routers from Cisco.
537. 21:03By 2001, they needed only 2,000.
538. 21:07They just cut back on their orders and
539. 21:09because of that, Cisco's earnings
540. 21:11collapsed and the NASDAQ went down 78%.
541. 21:16That is what a capex cut does to the
542. 21:18suppliers. Now, if Microsoft cut AI
543. 21:22spending by 20% for example,
544. 21:24Microsoft might be fine, but Nvidia's
545. 21:27revenue, Microsoft's revenue, Samsung
546. 21:29and SK Hynix's revenue, right? It's not
547. 21:32their spending cut, but that would be
548. 21:35their earnings collapse.
549. 21:37Jim Chanos thinks that we could get that
550. 21:39moment soon. His words are sometime in
551. 21:43late 2026 or 2027. We're going to get a
552. 21:47>> point in late '26, '27 where, you know,
553. 21:51people are going to start putting pencil
554. 21:53to paper besides us and say, "Wait a
555. 21:55minute. Does this next trillion dollars
556. 21:57make sense?" Make sense if you're only
557. 21:59going to earn 50 billion on it?
558. 22:01We could earn that on treasuries.
559. 22:04>> Maybe it's when Shrek 5 comes out. I
560. 22:05don't know. Every Shrek movie seems to
561. 22:08coincide with the market reaching a
562. 22:09peak. Shrek 1 for example in May 2001,
563. 22:12that was the top of the dot-com bubble.
564. 22:14Shrek 2 May 2004, post-war correction.
565. 22:17Shrek 3 May 2007, pre-subprime crisis.
566. 22:21Shrek 4 May 2010, flash crash. Shrek 5
567. 22:25scheduled to be released June 2027.
568. 22:27Obviously, that's a joke and it's my way
569. 22:28of saying no one knows what's going to
570. 22:30happen and the dates don't perfectly
571. 22:31line up, but it could happen and it
572. 22:33would be so ironic because it kind of
573. 22:35lines up with what Jim Chanos is saying
574. 22:37about when the bubble might pop. Now,
575. 22:40either way though, there's two scenarios
576. 22:43that could happen. Scenario number one
577. 22:46is
578. 22:46Korea stays contained to just Korea.
579. 22:50Memory prices stay the same,
580. 22:52hyperscalers keep spending through 2027,
581. 22:55and the KOSPI eventually recovers. Some
582. 22:58analysts genuinely believe that the AI
583. 23:00AI has another 6 to 12 months of growth
584. 23:02and that is very possible.
585. 23:04Scenario number two is Korea was just a
586. 23:07warning. All right, it is the first
587. 23:09domino.
588. 23:10And the moment one hyperscaler cuts back
589. 23:13on CapEx, they cut back on spending,
590. 23:16that's when this leveraged US market
591. 23:19that is the most leveraged in US
592. 23:20history, that's when we'll get to find
593. 23:23out what happens when a 4 and 1/2% of
594. 23:26GDP in margin debt starts to unwind.
595. 23:29And we kind of just got a preview of
596. 23:30what that could look like because Korea
597. 23:32just showed us, which is margin calls,
598. 23:35it is forced selling and the doom loop
599. 23:37and government intervention. For now,
600. 23:40the analysts in the market are telling
601. 23:42us that they have the utmost confidence
602. 23:44that AI will continue to grow and that
603. 23:46this is
604. 23:47definitely not a bubble.
605. 23:49But there was a tweet I saw that sort of
606. 23:51compared all this to April 1912.
607. 23:54As reports were coming in that the
608. 23:55Titanic was in trouble,
609. 23:57the vice president of the company that
610. 23:59owned it said, "We have absolute
611. 24:00confidence in the Titanic. We believe
612. 24:02the boat is unsinkable."
613. 24:04He said that after it hit the iceberg
614. 24:06and it was already sinking. And that's
615. 24:08how these things tend to go. 14 million
616. 24:11Korean investors also had absolute
617. 24:12confidence that 3 weeks ago the market
618. 24:15would continue going up.
619. 24:17Now, this is not financial advice and
620. 24:19I'm not telling anyone to not invest
621. 24:20their money,
622. 24:21but I want you to know that this is
623. 24:23what's happening and to be really
624. 24:25careful with leverage and debt,
625. 24:27especially at a time like this. Now, in
626. 24:30the future, I think AI will probably
627. 24:32change our lives for the better and
628. 24:34there will be companies worth tens of
629. 24:36trillions of dollars, right? But for
630. 24:39now, investors are paying
631. 24:42future prices in the present time, as
632. 24:45though these companies have already
633. 24:47accomplished all the things they
634. 24:49promised us.
635. 24:51Now, if you'd like to see more of my
636. 24:52thoughts about the economy as well as
637. 24:53updates on my own investments from time
638. 24:55to time, those videos live in the
639. 24:56premium member section where I post a
640. 24:58day early and I post my extra thoughts.
641. 24:59If that is valuable to you, the link is
642. 25:01down below. I'd love to get to know your
643. 25:02thoughts. As always, I hope you have a
644. 25:04wonderful rest of your day. Smash the
645. 25:05like button. Subscribe if you haven't
646. 25:07already. I'll see you next time. Take
647. 25:08care.