[Viewpoint] The soothsayer of SeoulWarren Buffett was as robust as ever. Last weekend, the famed investor brought a festival to his hometown of Omaha, Nebraska. Buffett has been holding an annual meeting for his Berkshire Hathaway shareholders for several decades. And last weekend, as always, the world waited for his pearls of wisdom.
Buffett lived up to expectations by giving a detailed diagnosis of the U.S. economy. He expressed concerns about low interest rates and inflation, made market forecasts and discussed the situation in Greece. He didn’t avoid sensitive topics either. He defended Goldman Sachs, the prestigious investment bank accused of a fraud, insisting that based on his trading and investment experience of 35 years with Goldman, the bank is innocent of malfeasance.
His opinion was clearly the opposite of the voices of average Americans on “Main Street.” It doesn’t matter whether the masses or the markets believe him or not. Buffett’s signature style is a confidence that those who follow him will succeed while those who go in the opposite direction will fail. He is not called the “Oracle of Omaha” for nothing.
Reading the news about Buffett made me wonder what Mirae Asset chairman Park Hyeon-joo is up to. In the past, Park was like a Korean version of Buffett. He was passionate about success, had a keen insight for the markets, was decisive and fearless and communicated with the markets perfectly.
Whenever there was a crisis, he made a skillful diagnosis of the Korean economy and forecast where the market was heading. His methods varied, just like Buffett’s. He would not only contribute columns to newspapers and give interviews but also write letters to his employees and executives.
When the market plummeted in 2003, Park expressed his concerns in an interview with a weekly magazine. “Only foreigners are buying stocks now. We are forfeiting the fruits of economic development of four decades to foreign investors.” In a letter to employees in January 2006, he wrote, “The Korean market is still undervalued.” The Kospi had been rising for 11 weeks straight and broke the 1,400 mark, and people were concerned that the market was overheated. But the market responded to his words, and stocks rose even further.
When Park spots a good stock, he doesn’t keep it to himself. He recommends the investment to everyone, even to managers of other funds. The Yeouido stock market was skeptical at first, but later it capitulated to Park’s analyses and forecasts. Prices of some stocks went up simply because Park Hyeon-joo had bought them. He proposed savings funds, which started a fund craze in Korea. It is thanks to him that we are accustomed to the phrase “fund capitalism.” A Mirae Asset executive said, “If the United States has Buffett, Korea has Park Hyeon-joo. Their nationality and the size of their wealth are different, but they are essentially the same.”
But for two years, Park has been a silent oracle. His last official interview with the Korean media was in November 2007. Last week, he broke his long silence and had a news conference with Korean correspondents in New York, but he merely announced his plan to move into the New York market. People at the conference said he was guarded with his words like never before.
It’s not clear why Park has gone silent. The market’s guess is that the “Insight Fund” is the key. Mirae Asset celebrated its 10th anniversary by offering an ambitious new product named the Insight Fund. Four trillion won ($3.59 billion) worth of funds was sold in a month, but the timing was not right. As soon as the fund was launched, the portfolio nose-dived by over 60 percent.
While the fund has recovered quite a bit of that loss, the net value of the portfolio is still negative. High mountains have deeper valleys. Criticism of Park was as vivid as the celebrations of him in the past. Park must have felt frustrated for being accused of taking advantage of investors and charging high fees. He must also have been stunned to face the global financial crisis. A Mirae Asset insider says that all these factors have kept Chairman Park’s lips tightly zipped.
Talking about your own mistakes is an important part of communication. It’s also one of the responsibilities of a market leader. That’s exactly what Warren Buffett does. He confessed that the 1993 acquisition of shoemaker Dexter was the “worst deal ever.” He sometimes uses extreme language. He said that he did not expect the fall in energy prices and boosted his holding in ConocoPhillips in 2008. That, he said, was “dumb.”
Today’s financial markets can be scenes of chaos. It is hard to predict the flow and direction of money. Everyone has a different view on interest rates and the stock market. Over 600 trillion won has nowhere to go. That’s why the Samsung Life IPO attracted 17 trillion won. What we need at this juncture is honest talk. It is about time Park Hyeon-joo breaks his self-imposed silence.
*Translation by the JoongAng Daily staff.
The writer is the business and industry editor for the JoongAng Sunday.
By Yi Jung-jae