AWARE, 2024 Retrospective & Manifesto

2024 was a meaningful year for AWARE. We officially launched the PRO membership plan, which had been offered as a beta service since mid-2022, and worked hard to make more people aware of AWARE’s presence. Before we knew it, we had become a service visited by more than 10,000 people a month, and we focused on original content and corporate research to deliver more value to over 800 members. To deliver content to members more conveniently, we even switched platforms twice, and we believe we made significant progress in both our technology infrastructure and user experience. None of this would have been possible without all of you who support our mission.

The model portfolio’s cumulative return surpassed 100% for the first time, and it recorded 62.14% in 2024 alone. Over the same period, the S&P 500 index returned 24.6%, meaning we outperformed by 37.54%. We believe that making long-term investments in high-quality businesses is virtually the only way to beat index returns, and that it is also the most psychologically comfortable way to invest. On top of that, investing within a level of volatility you can personally tolerate is the key to avoiding the classic mistake of selling low and buying high.

Boston-based Fidelity’s legendary fund manager Peter Lynch ran the Magellan Fund from 1977 to 1990, delivering an average annual return of 29.2% over his tenure. Yet most of the fund’s investors are said to have lost money. This means that the vast majority of investors fail to time their buys and sells correctly—and that includes you reading this. The same is true even for hedge fund managers, who are considered professional investors, which is why traditional hedge funds are increasingly becoming a sunset industry on Wall Street. Don’t count on the luck of being one of the chosen few who can consistently get the timing right.

When I first founded AWARE, I started with the hypothesis that we could improve Korea’s distorted financial environment through education. Three years on, various financial accidents and crimes continue to occur, and a host of issues—from losses on Hong Kong ELS products and overseas real estate funds, to listed companies deceiving their shareholders, to the fallout from excessive real estate project financing—remain unresolved. What I have learned from our experiments so far is that to solve deeply rooted problems, you ultimately have to become a direct participant in the industry itself.

Finance is, at its core, capital allocation. In the 1980s, Korea’s modernization and the development of heavy and chemical industries were made possible by a state-directed financial system in which elite bureaucrats educated in the United States funneled resources into a select group of large conglomerates. But the very system of government-led finance that enabled the Miracle on the Han River has unfortunately become an obstacle to our society’s progress in the 2020s. Listed companies, which owe a fiduciary duty of good faith, routinely engage in shareholder deception, undermining the country’s overall investment appeal. Conglomerates hoard cash on their balance sheets or invest in projects that don’t make economic sense, eroding industrial and corporate competitiveness. Financial institutions, lured by sweet short-term fees and interest income, have overinvested in real estate project financing, churning out empty commercial buildings and knowledge-industry centers. This kind of misallocation of capital provides virtually no value to our society.

The startup ecosystem, touted as the new growth engine of our economy, is driven more by vested interests than by merit. The main limited partner in venture capital funds that invest in startups is the Korean government, which, despite lacking expertise and a real understanding of industries, selects “promising themes” every year, inflating bubbles—such as the metaverse craze in 2022—and amplifying the scale of the inevitable bust that follows. Startup founders do not build businesses around what they are truly good at; instead, they rush into whatever sector the government designates as that year’s “hot industry.” It is a vicious cycle in which founders, customers, and investors are all left unhappy.

I believe that a society can only progress when each person can focus on what they do best, and that finance ultimately exists to serve your happiness. We will become Korea’s first player not to “innovate” finance, but simply to do finance the right way.