This year, China and South Korea have presented us with a textbook case of capital siphoning + a retail-driven market. Now, let's focus solely on South Korea.

We are not discussing the skepticism regarding valuations in the storage industry; we assume all high valuations are rational and reasonable pricing.

Retail investors account for 70% of trading volume in the South Korean market, tending to use high leverage and favoring derivatives. Although South Korea's secondary market is a free market, its total capital pool remains limited. This creates a paradox:

Under the "reasonable" valuation models currently popular due to the AI boom, the valuation scale of Samsung and SK Hynix has already exceeded the cash liquidity that the South Korean market can provide. Even if your valuation is reasonable, and even if you truly deliver massive cash flows three years from now, the market won't survive until then.

Meanwhile, because the market believes these two companies have enormous valuation potential, everyone is leveraging up to the hilt and flooding into related enterprises and sectors. Consequently, other assets in the market will inevitably be sold off at bargain prices or undervalued, creating a magical siphon effect where the broader index rises while 90% of individual stocks fall. (Of course, if those rising 20% of companies aren't included in the index, the index performance would be even worse.)

It gets worse: since the primary investors in the market are retail traders, and everyone is fully leveraged, there is no spare cash left to invest further in these two companies. Once all available cash has been used to buy, the buying pressure disappears, leaving only selling pressure. If the price drops, those with maximum leverage will face forced liquidation one by one, triggering a cascade effect.

This is why SK Hynix decided to list rapidly on the US stock exchange at any cost despite the favorable market conditions $SK Hynix(SKHY.US), hoping that capital from the US market would put a floor under SK Hynix's valuation.

In the stock market, we talk about value and cash flow, but ultimately it's very simple: it's just about buying and selling. For short-term stock prices, fundamental value is worthless; only supply and demand dynamics are the ultimate truth.