Chapter 22. KNC International (5)

Park Geon-hwi cheered.

'Of course! As expected, investing in blue-chip stocks is the right choice. You shouldn't even look at such junk stocks.'

He approached Kang Seon-woo, who was having lunch with Cha Su-yeon in the cafeteria, and spoke as if offering comfort.

"KNC International is showing signs of a sharp drop. Wouldn't it be better to sell now?"

"According to a friend, there's no immediate problem."

Then, other employees who were listening chimed in.

"Isn't 10,000 won too expensive?"

"It's risen about seven times compared to last month."

Kang Seon-woo said calmly.

"According to my friend, the government will soon make an announcement. He says it's a buying opportunity because the stock is currently adjusting."

Park Geon-hwi laughed loudly, pretending to be surprised.

"What do you mean? What announcement will the government make? I even asked my cousin who works at Future Investment Securities, and he said it's a false announcement. It can't be verified. Stocks that rise due to rumors usually plummet quickly."

"I don't know much, but that's what I heard."

"Listening to such talk and investing could be disastrous. Small-cap stocks with low trading volumes are hard to sell if problems arise. If it's revealed as a false announcement, it won't just end with a stock price drop; it will be delisted. Even if it makes you feel bad to hear that your stock might be delisted, I'm saying this for your own good, Seon-woo."

"Thank you for your concern."

Kang Seon-woo didn't argue with him.

Because the content itself wasn't wrong.

'From this, it seems he didn't get his MBA just for show.'

When Park Geon-hwi spoke confidently, the employees who were showing interest nodded.

"Indeed, it seems a bit risky."

"Of course, since Geon-hwi works at Future Investment Securities, he knows well."

"Following Geon-hwi's advice, it's better to invest in blue-chip stocks."

Kang Seon-woo didn't seem to care much. He probably had no intention of selling.

Park Geon-hwi smiled inwardly.

'Good. After everything crashes, you'll regret not listening to me.'

KNC International's stock price, which had fallen 9% the previous day, dropped another 20% the next day, falling below 10,000 won.

The employees told Park Geon-hwi:

"I'm glad I didn't buy it, thanks to your advice."

"Indeed, experts are different."

"I almost made a big mistake by buying it."

Thinking about this, Park Geon-hwi felt good as he headed to Development Team 3. However, Kang Seon-woo was grinning.

'Even though it plummeted, did he still make a profit?'

Park Geon-hwi asked, trying to comfort him.

"The drop today was quite severe. Are you okay?"

Kang Seon-woo asked, looking confused.

"What drop?"

"It dropped 20% today."

"That was three minutes ago. It just hit the upper limit."

"What?"

"Didn't you see the news?"

"News?"

Kang Seon-woo showed him the news.

[(Breaking) Ministry of Foreign Affairs Announces Cobalt Reserves in Congo!]

Seeing this, Park Geon-hwi was shocked.

"What? Why is the Ministry of Foreign Affairs involved?"

The employees said regretfully:

"Indeed, we should have bought it then!"

"Oh! I should have bought it when Seon-woo suggested it."

"What's going on, Geon-hwi? You said it was a false announcement?"

"Did you get it wrong?"

"Umm, well, that is..."

Park Geon-hwi was flabbergasted.

'Why is this happening?'

* * *

[Ministry of Foreign Affairs Officially Recognizes KNC International's World's Largest Cobalt Mine!]

[A Hopeful Leap for a Battery Powerhouse!]

[No Worries for Korea's Cobalt Supply for the Next 10 Years...]

[A Monumental Achievement of Resource Diplomacy!]

[KNC International Announces Full-Scale Cobalt Production Starting Next Year!]

[Analyst Kim Heung-gyu Sets KNC International's Target Price at 50,000 Won!]

The Ministry of Foreign Affairs officially recognized KNC International's cobalt mine report.

It was the Ministry of Foreign Affairs, not just any other entity.

A government agency wouldn't announce false information.

This means the cobalt reserves are real!

The stock price, which had fallen to 8,000 won, immediately hit the upper limit as soon as the Ministry of Foreign Affairs made the announcement, and the stock discussion board was in chaos.

- The Ministry of Foreign Affairs has made an announcement!

- This is real! It's a huge deal!

- Is the cobalt reserve in Congo real?

- Who said it was a false announcement?

- Wow! Korea did it!

- Never underestimate Korea again!

- But how did the Ministry of Foreign Affairs verify the reserves?

- It's all visible if you look closely.

- Haha, where are those who said it was a rumor?

- Were there any of you who didn't add to your position that day?

- There are 30,000 buy orders at the upper limit. It will likely hit the upper limit again tomorrow.

- It seems to have risen too much. Shouldn't we sell soon?

- What are you talking about? It's just beginning.

- With full-scale cobalt production, it could reach 200,000 won!

- It's 1 million tons! At 50 million won per ton, that's 50 trillion won!

- Is mining done by digging the ground?

- Yes, by digging the ground.

- Even with mining costs and other expenses, the market cap should be at least 10 trillion won.

- That would make it the top of the KOSDAQ.

- I should have bought it when it was a rumor.

While looking at the news and comments, Seon-woo, who had rushed home, asked:

"If the Ministry of Foreign Affairs made the announcement, isn't it real?"

I was speechless.

"Do you believe such nonsense? What does the Ministry of Foreign Affairs know to make an announcement?"

"Maybe the employees went and dug the ground."

"Are you kidding?"

"Isn't there an embassy in Congo? Maybe the embassy staff went and verified it."

"Do you know how big Congo is?"

Congo's territory is one of the largest in Africa.

The mine isn't in the center of a major city; it's likely in a remote area with poor road access.

Would employees go all the way there?

"Come to think of it, that makes sense. But why do people believe it without thinking?"

"The weight of words depends on who says them."

People who didn't care about stocks recommended by a securities firm's new employee would rush to buy if recommended by Aaron Baker.

Since the Ministry of Foreign Affairs confirmed the report, everyone had to believe it.

Indeed, after the Ministry of Foreign Affairs' announcement, KNC International's stock price soared daily, and analysts raised their target prices as if in an auction.

A theme stock craze swept the market, with lithium and battery-related stocks rising one after another, followed by electric vehicle-related stocks.

With the increase in electric vehicles, battery charging station-related stocks rose, and with the need for more power transmission, wire-related stocks rose.

"This is a theme stock craze."

This isn't a one-time occurrence.

The history of the stock market is the history of theme stocks.

During elections, the entire market buzzes with election theme stocks. Stocks soar if the company's CEO is a potential candidate or if a relative is a board member.

In the early 2000s, a construction company announced it would salvage a treasure ship in the East Sea, submitted a business application, and promoted it.

The company, which was on the verge of bankruptcy, hit 17 consecutive upper limits after announcing the treasure ship salvage plan and was later delisted.

In the late 1980s, a rumor swept the securities market that the Chinese government would install windbreaks along the Great Wall and award the contract to a Korean company.

The Great Wall is 6,350 kilometers long.

Winning the contract would secure a decade's worth of work.

Construction stocks and steel stocks, which were expected to make the windbreaks, soared.

This is understandable.

However, the rumor that if each worker ate one bread, it would be a significant amount, caused baking-related stocks to soar. Then, dairy stocks soared because workers would be thirsty from eating bread, and pharmaceutical stocks soared because workers would need digestive aids from eating too much bread.

Now, this sounds absurd, but investors at the time took it seriously. And it's the same today.

History always repeats itself.

Seon-woo asked, puzzled:

"But what's the relationship between KNC Security and KNC International? It rose 17% today."

"Surprisingly, there's no relation."

"But why is it rising?"

"······I don't know."

Maybe because the names are similar?

I bet even a Nobel Prize-winning economist couldn't explain this.

In the stock market, you often witness such phenomena. Watching them, it seems there's no real reason for stocks to rise or fall.

The stock price, which was 1,500 won last month, is now over 30,000 won. Our 400 million won investment has grown to 900 million won.

"Is this real?"

"Don't get too excited. It's not your money until you sell."

Actually, making money from pump-and-dump schemes is very easy.

You just need to jump on a soaring stock. The chances of a continuously rising stock plummeting right after you buy it are very low.

However, no one has made money from pump-and-dump schemes; only those who lost money. The reason is they couldn't time their exit.

"Until when will it keep rising? I heard it might hit 100,000 won."

I smiled.

"Is that even possible?"

When a stock is rising, it feels like it will rise forever. However, no asset can keep rising indefinitely.

Especially if it's not supported by performance and is only driven by supply and demand.

The cost of the scheme increases like a snowball as the stock price rises.

To double a 10,000 won stock, you need 10,000 won, but to double a 100,000 won stock, you need 100,000 won.

"It's about time it ends."

No matter how enjoyable, a party must end eventually.

The conclusion of all pump-and-dump schemes is the same.

A sharp drop.

If a soaring stock price stays at that level, it's not a pump-and-dump scheme. Therefore, you must sell before the drop.

If you miss the selling timing, you can't sell at all.

You might think you can sell at a lower price when the stock drops, but in Korea, due to the upper and lower limit restrictions, you can't sell more than 30% above or below the previous day's closing price.

In the worst case, you can only watch your assets drop 30% daily without being able to sell.

From my memory, it seemed to have risen to just below 40,000 won before plummeting vertically.

When a whale enters a small pond, the water level rises. But when the whale tries to leave, the water level drops.

When can the whale leave the pond?

It's when a heavy rain raises the water level temporarily, allowing the whale to escape safely.

Here, the heavy rain represents individual buying pressure.

In other words, large investors offload their stocks to individuals and cash out. Naturally, the late-arriving retail investors bear the losses.

"By now, they're all timing their exit."

Not just the schemers but also the Ministry of Foreign Affairs employees who jumped on the bandwagon.

After everything is revealed as a lie.

The prosecution, along with the Financial Services Commission, launches an investigation.

What was the result?