The recent meltdown in South Korean equities has become more than just a global market story — it has turned into a reminder of why chasing market momentum often ends badly for retail investors. Speaking to NDTV Profit's Money Wise, Kirtan Shah, Founder and CEO of Trivanda Wealth, said the biggest lesson from the recent correction is that investors should avoid making investment decisions driven by fear of missing out, or FOMO.
While South Korea grabbed headlines after the Kospi plunged sharply, Shah argued that the correction was broader, with AI-linked markets and stocks across the world witnessing steep declines after a euphoric rally. Many semiconductor, memory-chip and technology names that had surged over the past two years have corrected between 30% and 50%, highlighting how quickly momentum can reverse.
Shah believes retail investors are generally better suited to a contrarian approach than momentum investing.
According to Shah, retail investors often enter a theme just as institutional investors begin exiting it. "The information reaches retail investors at the fag end of the cycle," he said, adding that social media and hindsight-driven narratives often amplify FOMO precisely when risks are the highest.
He also cautioned against leveraged products, such as 2x and 3x exchange-traded funds, noting that while they magnify gains during rallies, they can erase wealth just as quickly when markets turn lower.
Momentum investing requires getting both the entry and exit right — something even professional investors struggle to achieve consistently. Contra investing, on the other hand, focuses on sectors or stocks that are out of favour, offering a larger margin of safety and potentially lower downside risk, even if returns take longer to materialise.
He cited Indian IT services as an example of a potential contrarian opportunity after the sector's correction, while stressing that investors should not confuse temporary weakness with structural deterioration.
For global diversification, Shah reiterated that international exposure remains important, but should form only a limited part of a portfolio.
Instead of chasing whichever country or theme is outperforming, he prefers a disciplined allocation, with exposure to US technology through Nasdaq alongside gold as a hedge.
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