Dollar Investing Principles for a Top 1% Portfolio When the Dollar Wavers (Dr. Hong Chun-wook)
- What to look for
- Understand why the same foreign asset can have a different return in won and examine the speaker’s approach to hedged and unhedged exposure.
- Why it matters
- Calculate the asset’s dollar return separately from currency effects, and distinguish an index reference level, a personal forecast and a portfolio target weight.
Timeline
4 segmentsThe speaker prefers not to hedge because forecasting is difficult and hedging has costs, favoring a mix of won and foreign assets with rebalancing when weights drift. This is his approach, not proof that unhedged exposure suits every investor or that won and foreign assets always move in opposite directions. Rather than treating a lower exchange rate alone as a buy signal, examine horizon, won spending needs, target weights and transaction costs, separating asset returns from currency effects.
An independent exercise, not a statement by the video creator or verification of every claim in the video.
A 10% Gain in a Dollar Asset Can Still Mean a Loss in Won
In a hypothetical example excluding dividends, costs and taxes, assume a dollar-denominated asset gains 10% while the won-per-dollar exchange rate falls 10% over the same period. The unhedged won return is (1 + 10%) × (1 − 10%) − 1 = −1%. An investment of one million won would be worth nine hundred ninety thousand won, unlike the 0% obtained by simply adding the changes. Separate asset-price and currency effects before comparing actual and target weights; the calculation alone does not determine a trade or hedging choice.
Check for yourself
- Is the exchange rate consistently expressed as won per dollar?
- Have the dollar asset return and the won-converted return been checked separately?
- Have conversion and hedging costs and the timing of future won spending been considered?
Limits of application
This independently written calculation models simple unhedged exposure, not an actual product return. It excludes dividends, interest, taxes, conversion spreads, fees and interim cash flows, and does not calculate a hedged product’s return. Hedging outcomes and costs vary by product, interest-rate differential, hedge ratio and horizon. It is not an exchange-rate forecast or a proposed target allocation.