The Gambling Den

The stock club.

"Ugh… why the hell are stocks going up?"

"For real, why are they rising?"

"I don't know!"

The 2x-inverse investors who had been strutting around only days ago now wore the faces of the dying. The market was bouncing back.

"You should've just taken a reasonable profit and gotten out."

"I thought it was going lower…"

"There were plenty of chances to buy back in. Why didn't you?"

Young-su tilted his head. Unlike the ones already underwater, the 2x-inverse crowd had had every ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠opportunity in the world.

Worst case you're even — just swap into longs.

Literally break-even. At minimum, you don't take a loss. It was hard to understand why they hadn't — and yet.

The economy's this bad, so why?

Myeong-tae, a true believer in inverse plays, saw it differently. This was nothing but a dead-cat bounce. The market would fall again. He was convinced this was only the setup for a deeper drop.

"It's definitely going back down."

"I feel like I heard ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠that last week."

"No, I'm serious…"

"If I'd listened to you and bought the 2x inverse, I'd have blown over a million won by now!"

At first they had been thrilled, calling it another chance to average down. But as time dragged on—

Fuck, why the hell—!

—the reality of being stuck started to sink in. And that reality warped their thinking.

"I saw a YouTube video yesterday saying the US-China trade war isn't as big a deal as people think."

"Really?"

"Why?"

"Apparently Trump just talks tough while trade keeps flowing behind the scenes."

"Right, right! That bastard's all bark."

The market had risen. The prevailing view was flipping from negative to positive.

YouTube was flooding with them. Experts lined up to rattle off reasons for the rally.

Hopeful talk dominated the news as well. The sense that the bear market was over was starting to feel real — and the market was, in fact, rising. One by one, the club members were being talked around.

No… that's not it…

Even Myeong-tae's conviction began to wobble. His certainty about the decline had always drawn strength from the people around him. They had called him a pioneer — the one who rationally read the bad news floating through the market and called the drop.

He swallowed hard.

Was he the one falling behind now? The moment that thought surfaced, his faith started to crack.

"All right — one~ two~!"

"Hrzmmlrgh!"

"Loss—!"

Some people still held firm. Nam-uk's friends forcibly pried open his account.

At one point the profit had printed close to +30%. Now it had slumped into single digits, looking pathetic.

"Don't tell anyone…"

"We won't."

"God, you idiot. You don't sell when you're up, and this is what you get?"

Every point the market climbed stamped a matching loss onto the position — and the damage was not one-to-one.

"But—"

"I said don't tell anyone!"

"No — the KOSPI rebounded eight percent, but the 2x inverse dropped twenty. Doesn't that seem off?"

"?"

"?!"

The question hung in the air. The friends who had never touched a 2x inverse had no idea. Neither, for that matter, had Nam-uk himself.

Wait, really?

They looked it up after the fact. ETFs carried something called negative compounding. They did not track the index one-for-one. Even in a sideways market, negative compounding slowly melted them down. On top of that, the ETF issuer skimmed about 0.6% a year in fees.

"Whoa — look. Last April the index was at the same level as this year's low, but the 2x inverse is a thousand won cheaper."

"So if you'd held the 2x inverse from then, the index is flat but you'd be down fourteen percent?"

"…"

The effect got worse the more leverage the ETF used. And the 2x inverse tracked ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠the KOSPI 200 futures index at negative two times.

…

They hadn't known. The market had been falling for so long that the product only ever seemed to go up — never down. A chill ran down their spines. If the market didn't crash, simply holding the thing meant losing money.

"Is that true?"

"So the 2x inverse was the dangerous one…"

"Is regular inverse okay?"

"Apparently it's just how ETFs work."

"Screw it — I'm cutting my losses right now and buying stocks!"

Information they never would have bothered looking up during a bear market spread through the club in no time. Even Nam-uk, who had held the firmest conviction, began to waver. He had never realized the investment had a defect like this.

It's irreparable junk that tanks your rank just for sitting in the inventory!

Simply holding it made the specs keep getting worse. The 2x inverse had the same problem. Even skimming the news was enough to make his head want to explode. Factor in the tracking error and he couldn't take it anymore.

Of course — you've been staring at nothing but bearish takes all day.

Sora watched the club members from a step back — in physical distance, and as an investor. After a long internal struggle she had quit inverse trading. That did not mean she had bought stocks. She had done neither, and time simply slipped past.

"Sora, what have you been buying lately?"

"I bought some peace of mind."

"Huh?"

"I guess I've been looking at the market from scratch again…"

The reason was simple. Once she had taken an interest in inverse plays, she had realized how narrow her view of the world had been.

There are good headlines and bad headlines. That's all it is.

In the end, a stock price was the collision of those two kinds of news. An investor's job was to find the midpoint. And one more thing: markets did not move on reason alone — exactly the phenomenon the club was watching right now.

Sora's gone a little soft in the head too.

Hye-ri couldn't quite make sense of any of them — not the kids drowning in 2x inverse, not the ones earnestly analyzing stocks. ‍‍‌‌⁠​​⁠‌​​‍​​‍​‌​⁠‍‌‍⁠⁠‌⁠‌‍‌‍‌‌‌‍⁠​‌​‌​‌‍‌‌‌⁠‍​​‌‍⁠‌‌⁠⁠All she ever did was copy someone else.

KakaoTalk ♪

The message she had been waiting for arrived right on cue.

"Who's that from?"

"Hm? Why?"

"No… you just look different from usual."

She must have let it show on her face without meaning to. Hye-ri jumped at Sora's observation.

So Sora does have a sense for these things.

As a freshman she had done nothing but study, to the point of ignoring everything else. Without her striking looks and presence, the seniors would have marked her long ago. That Sora had changed.

"Someone Sora knows pretty well, actually."

"Who?"

"It's a secret~♡"

"Did you get a boyfriend?"

Maybe not. But Sora's guess was about half right.

Every so often he tossed her a ticker. She ate it up with pleasure.

The drop was big, the US-China trade war is cooling off, so a rebound makes sense, but…

Sora was not so lucky. She was trying to think it through herself — and the more she thought, the less she understood. The US-China trade dispute was not resolved. Emerging markets outside Korea were staring down default. The market seemed far too drunk on its own euphoria.

Then there was the question that had surfaced while she watched Sonik-jwa's video the night before.

Zen-riddle talk. He never gave a clean explanation. She had shrugged it off as something about the latest headlines. But that man never said anything meaningless. If only out of sheer contrarian spite, he would settle the score from his last appearance.

Maybe I should go ask him…

She knew the guy, after all.

A common delusion among short sellers: that you can feast on the short side, then swap into longs and feast again.

That doesn't work.

Their heads were marinated in negative thinking. People like that were never going to produce a bull case.

"I get it up to that point…"

"You do?"

"I've been thinking about it on my own, you know."

"Someone like you?"

"Want me to hit you?"

There was no better teacher for why you shouldn't short carelessly than living through it once.

I figured she'd come sniffling, asking how to escape the 2x inverse.

Sora had grown. It wasn't only the sex appeal ripening raw.

"So what did you mean?"

"About what?"

"What you said on 119 Stock Talk. That there was no reason then, but there is now."

"Ahh—! So you finally saw it!"

"Don't be an ass."

He had scattered a little bait — just enough to screw with the analysts who made a living off their grift.

The second a bull market starts, they trip over themselves to get on air.

Reasons for the rally. They freestyled them into place, and the public believed every word. A justification for the rise that hadn't existed at the time had been manufactured after the fact. In reality, nothing had changed at all.

"Isn't the easing of US-China tension real, though?"

"That whole thing is pure bullshit."

"What?"

"Korea never took a hit from it in the first place."

"?!"

Global financial anxiety pushed the exchange rate higher. Higher rates made export goods more price-competitive, which boosted export volume.

Chinese tariffs? Just route around them.

That was why Korean companies built factories in Southeast Asia. Southeast Asia and China had preferential tariff agreements. Settle the trade in yuan and the duties disappeared — a project designed to raise the odds of the yuan joining the reserve-currency club.

"Exports actually went up. The current account surplus widened too. Factor in the exchange rate and it's obvious."

"Ah!"

"Hm?"

"So that's why the market's been rebounding lately…"

"No."

"?"

The headlines the market was chewing on were just noise people had slapped together — copy-paste whatever global story felt good.

That's why you read the original sources.

Basic stock-investor hygiene. But knowing that still left you a long way from actually analyzing the market.

"Then what is it?"

"Don't know."

"What?"

"Don't go hunting for reasons in the Korean market."

"…"

It was the only market in the world that defied analysis. Anyone who tried to invest on pure reason was first in line to lose money.

Even the foreigners get burned.

Which was exactly why every kind of manipulation thrived here. It was the investment method optimized for this market. Especially in a bear market. Liquidity dried up, and reading the flow of the index became nearly impossible.

"So should I short again?"

"How long are you going to keep gambling? This senior is worried about you."

"@^%@#$#@$!"

"Think about where that thin little pool of liquidity is going to pile up."

It was time to mess with biotech stocks.