Gangnam fact of the day

by on October 12, 2013 at 3:21 pm in Music | Permalink

I am here for a few days, so my attention turned to a new paper by Kim and Jung, entitled Investor PSY-chology, here is the abstract:

The global success of “Gangnam Style,” the 18th K-pop single by the South Korean rapper PSY in 2012, was an exogenous shock to international investor enthusiasm about DI Corp., because the company’s chairman and CEO is PSY’s father. The stock price of the semiconductor equipment company jumped by almost 800% in three months without material information. Using Korean microstructure data that identifies non-resident foreign individual (NRFInd, hereafter) investors and resident foreign individual (RFInd, hereafter) investors by nationality, we study international individual investor behavior. The count of flash mob videos and parody videos uploaded on YouTube from each country is our proxy for the enthusiasm of individual investors. We find that NRFInd (RFInd) investors in specific countries become net buyers (sellers) of DI Corp. when a flash mob or parody music video is uploaded in their country. This is because RFInd investors had already purchased the stock on the day PSY left Korea to meet Scooter Braun, the producer of Justin Bieber. Our results support a “resale option” explanation about the bubble in the asset price.

Hat tip goes to @EmanuelDerman.

mulp October 12, 2013 at 4:36 pm

Yet another example Tyler has found to prove markets are totally irrational because buyers and sellers do not base price on value, but on emotion, mood, affiliation, status seeking, wishful thinking, but absolutely not on data about cost.

revver October 12, 2013 at 6:17 pm

“…the producer of Justin Bieber.” um, really?

Sean Brown October 13, 2013 at 9:19 am

In thr year preceding every presidential election there are also bubble stocks that will double or even triple due to some tenuous cconnection to a candidate (e.g. “CEO was in the same graduating class as the candidate at X University.”).

It is really crazy how these “bubble themes” repeat themselves over time, despite the fact that the stocks always come back down at some point (Korea is not SO corrupt that the president will really help that much).

One thing that facilitates these bubble names (including DSI) is that stock borrow (for short sellers) is never available in the stocks. Not sure if it is manipulation of borrow (like we get here or in Japan pretty often) or just to to Korea’s poor stock-loan system.

Guzman Diaz October 14, 2013 at 5:17 am

I remember reading about this on The Economist last year http://www.economist.com/blogs/banyan/2012/10/investing-gangnam-style

Funny to see it go into academia now :)

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