Korean retail investors struggle to cut losses, holding on to or buying more losing stocks

A recent survey conducted by financial research institute Toss Insight reveals that two-thirds of Korean retail investors are struggling to cut their losses in the stock market. Instead of selling their losing stocks, many are holding onto them or even buying more shares in an attempt to lower their average purchase price. This behavior was observed in an online survey of 1,000 individuals aged between 20 and 50 who have experience investing in both domestic and overseas stocks, conducted from July 11 to August 21.

According to the findings, 42.2% of respondents continued holding onto their losing stocks, while 24.4% bought additional shares to reduce their average purchase price. Interestingly, investors who managed to cut their losses according to predetermined rules were less likely to report losses in stocks. The survey data showed that during the previous year, only 26.5% of these investors reported losses, compared to 41.7% among those who continued holding onto losing stocks.

The survey also highlighted a discrepancy between investors' self-perceived risk tolerance and their actual investment exposure. Among those who identified themselves as "conservative" investors, 66% were found to have high-risk portfolios. This suggests that many investors may be overestimating their ability to handle stock market volatility and are more exposed to risk than they believe they are.