How to buy & sell

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   By Guest Blogger Ryan Lewenza

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It’s been an extraordinary year for global equity markets, fueled by robust corporate earnings, central banks easing interest rates, and the AI boom. The TSX has climbed 22%, the S&P 500 is up 17%, and equity markets in Germany and Japan have surged 25%. But one market that doesn’t get much attention and has been on absolute fire has been the South Korean equity market.

South Korea’s equity market, known as the KOSPI index, has skyrocketed an astonishing 70% this year, making it the best-performing major stock market in the world. We made a strategic investment in this market a few years ago, and our conviction is now paying off handsomely with substantial gains for our clients.

Today, I want to walk you through the investment thesis and process that led us to this position, and share how we’re approaching it now that the market has surged. We’ll discuss our rationale at the time of entry, and how we’re thinking about locking in these exceptional gains. In essence, we’ll use our South Korean equity investment as a case study to illustrate how Turner Investments makes buy and sell decisions.

South Korean equity market is up 70% YTD

Source: Stockcharts.com, Turner Investments

Why did we initially invest in the South Korean market?

We initiated our position in South Korean equities in early 2023, following a significant correction in both the country’s stock market and currency. In 2022, the KOSPI index fell 29%, and the Korean Won depreciated sharply. These steep declines caught our attention and prompted a deeper analysis.

The market selloff created a compelling valuation setup. When evaluating global equity markets, we focus on metrics such as price-to-earnings (P/E) multiples, price-to-book (P/B) ratios, and dividend yields. By the end of 2022, the KOSPI index was trading at a P/B ratio of just 0.9x – a deeply discounted level, especially for a developed economy like South Korea.

We then examined historical data to assess what typically happens when valuations reach these lows. In every instance where the KOSPI hit this threshold, the market delivered strong 12- and 24-month forward returns. The historical pattern was clear: low valuations in South Korea have consistently led to robust recoveries.

Another key factor was South Korea’s leadership in semiconductors – a sector now surging amid the global AI boom. Major KOSPI constituents like Samsung Electronics and SK Hynix have seen explosive growth this year, reaching new all-time highs. Samsung, for instance, secured major contracts with Tesla and Apple to produce next-generation AI chips.

The slide below from our 2023 client presentation deck summarizes these points. In short, our investment was driven by: 1) a sharp market correction and currency depreciation; 2) exceptionally low valuations with strong historical recovery patterns; and 3) strategic exposure to semiconductor leaders benefiting from the AI-driven tech cycle.

All three catalysts have played out, and the result has been a standout performance from South Korean equities this year.

Client presentation slide explaining the rationale behind our South Korean trade

Source: Turner Investments, 2023 Outlook

Knowing when to sell an investment and lock in gains can be even more challenging than making the initial buy. It’s a delicate balance: you want to let your winners run, but at some point, you need to step in and secure profits. That’s exactly where we are now, focusing on the exit strategy.

To determine when to sell, we rely on a combination of valuation metrics and technical indicators. One of our first steps is to assess current valuations. Specifically, we revisit the price-to-book (P/B) ratio. When we initiated our position, the P/B was a compelling 0.9x. After a strong rally, it’s now at 1.3x – well above the long-term average of 1x and the highest level in over a decade. This sharp rise in valuation suggests the investment may be approaching full value, signaling a potential opportunity to lock in gains.

We also lean heavily on technical analysis to guide our selling decisions. Key tools include trendlines, support and resistance levels, and moving averages. A moving average smooths out price fluctuations by calculating the average over a set period – like the 50-day MA, which reflects the average price over the last 50 trading days. These indicators help identify the underlying trend and potential turning points.

For our South Korean ETF investment, we’re closely monitoring these technical levels. If the ETF begins to break below key support or moving averages, that will be our signal to start trimming or even exit the position entirely.

When we land a big winner, we often trim a portion of the position to lock in profits after a strong move. Then, we use technical signals to guide the timing of selling the remaining shares. This staggered approach allows us to secure gains while still participating in any continued upside.

We’ve had a great run with this trade but now comes the hard part: deciding when to sell and lock in a solid return for our clients. By combining valuations with technical analysis, we aim to make that decision with confidence and precision.

KOPSI index P/B has risen from 0.9x to 1.3x currently

Source: Bloomberg, Turner Investments

Ryan Lewenza, CFA, CMT is a Partner and Portfolio Manager with Turner Investments, and a Senior Investment Advisor, Private Client Group, of Raymond James Ltd.

Source: https://www.greaterfool.ca/2025/11/01/how-to-buy-sell/