In recent weeks, South Korean regulators have sounded Greenspan-like warnings for retail investors. On June 23, Kospi suffered a “Black Tuesday”, with the index plunging 10%, fuelled by a warning from officials to retail investors against toxic leveraged single-stock ETFs. Yet, since earnings are still growing strongly, investors are now back to chasing growth stocks again.
Former US Federal Reserve chairman Alan Greenspan, who led the American central bank for 19 years, passed away last week. He left behind a chequered legacy because many blame him for the subprime housing loans crash that triggered the 2008 Global Financial Crisis.
Greenspan is best remembered for his 1996 dinner speech at the American Enterprise Institute in Washington, DC, where he warned of “irrational exuberance” that “could lead to unexpected and prolonged contractions as they have in Japan”.
