Stocks to sell and stocks to buy diverge in a correction... 'Replacement strategy' more important than stop-loss

Summary

Lee Ji-hwan, CEO of Aurora Investment Advisory, explains how to distinguish a short-term correction from a structural downtrend and how to position accordingly. He dissects the four triggers behind the recent semiconductor plunge and argues they are overblown, leaving AI-driven memory leaders like Samsung Electronics and SK Hynix as strong buys on the dip. He advises exiting biotech as the rate-cut cycle ends, avoiding KOSDAQ until rate-hike talk materializes, and using inverse ETFs to hedge during sharp sell-offs. The core message is that retail investors should replace losing non-leaders with market leaders during corrections to stay in the AI bull trend.

• The semiconductor sell-off was driven by exaggerated rate-hike fears, misunderstood memory capacity changes, non-representative Broadcom guidance, and short-term profit-taking.
• All four fears lack fundamental weight; AI demand is intact and memory stocks remain the dominant leaders.
• Investors should buy Samsung Electronics and SK Hynix on weakness because leaders tend to fall more in corrections but recover much more strongly.
• Biotech/pharma stocks, having surged during the rate-cut cycle, are near a top as rate cuts end; exit biotech now.
• KOSDAQ typically rallies when rate hikes actually begin; avoid it until that phase starts.
• During sharp market-wide drops, hedge quality long positions with KOSPI inverse ETFs instead of selling the stocks.
• Non-leaders such as HYBE should be sold and rotated into AI-beneficiaries to keep capital working effectively.
• Psychological biases like loss aversion cause investors to hold losers; a replacement mindset helps overcome this.