As stocks plunge and retail investors’ losses mount, expert warns: “This is the worst choice”

[Financial News]   Amid growing concerns over the bursting of the artificial intelligence (AI) bubble following the recent sharp drop in the stock market, an expert analysis says the likelihood of the entire financial market falling into crisis is low. However, they warn that not all companies investing in the AI industry are likely to survive, making careful judgment essential for investors.
In a video posted on the 7th to his YouTube channel, “Professor Park Jeong-ho’s Yeouido Mansion,” Professor Park Jeong-ho of Myongji University’s Department of Real Asset Investment Analysis discussed the debate over an AI industry bubble and recent developments in the stock market.
“One of the questions I get asked most often these days is about the AI bubble theory,” Professor Park said. “I think a lot of people are asking because stock prices have fallen quite a lot.”
He said that he, too, had invested in a particular stock and had suffered considerable losses. He added, “No one among those called experts wins every time.”
Professor Park stressed that investors should be wary of leaving the stock market altogether because of investment losses. “If you leave the market because you’ve suffered heavy losses on an investment, you’ll realize too late when another opportunity comes along,” he said. “If you enter late, you could use leverage recklessly or invest at the peak, when stock prices have already risen significantly.”
He assessed the likelihood that the bursting of the AI bubble would lead to a crisis across the entire financial system as low. Professor Park said, “A truly systemic crisis often happens when people don’t realize it’s a crisis,” citing the past IMF foreign exchange crisis and the Global Financial Crisis.
He cited the fact that, at the time, problems worsened while the risks inherent in short-term external debt and derivatives were not widely known.
He analyzed that the situation surrounding the AI industry today differs from past financial crises. Professor Park said, “Everyone is now worried that the AI bubble might burst,” and argued, “The fact that everyone is watching means they are developing various scenarios and managing their response plans.”
However, he predicted that not all companies entering the AI industry would be able to grow. Professor Park said, “A tremendous number of companies are investing in the AI industry, but some will ultimately fail to win the market’s favor and fall by the wayside.” He explained, “This is a virtuous cycle that always occurs in an industry.”
He advised investors to be wary of reacting solely to stock price movements without assessing market conditions.
Professor Park said, “If you believe a crisis across the system is likely, increasing the share of cash or safe assets is one option.” However, he added, “Without making any assessment, deciding to leave the market after recouping only your principal when stock prices rebound a little is the worst choice.”
Professor Park also explained why he had not significantly reduced his investment allocation, saying, “I judged that it absolutely wouldn’t go as far as a systemic crisis.” He added, “There’s only one way to respond quickly: you have to stay close to the investment market at all times so you can quickly recognize a shift in market sentiment and invest.”


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