Park, an office worker in his 30s, felt left behind early this year as the stock market climbed steeply and stories of people around him making money from stocks kept coming. It was ‘FOMO’ (FOMO·fear of missing out). With no spare cash on hand, he took out a 20 million won bank loan and began investing in stocks.

Thinking the KOSPI had risen too much, Park turned his eyes to the KOSDAQ. He bought 5 million won worth of a KOSDAQ stock. Three months later, the return on this stock stands at ‘-20%’. Having jumped in because everyone was calling it a ‘bull frenzy’, he was left only with debt. On the 6th he said, “I still have loan funds sitting as cash in my account, and I am afraid that if I invest carelessly I will see an even bigger loss, so for now I am just watching.”

As the KOSPI pierces the 7,000 ceiling and soars, the shadow of ‘debt-fueled investing‘ (borrowing to invest) is darkening. The balance of margin loans, a key gauge, has hit a record high, and debt-fueled investing among seniors aged 60 and overan age band where income declines over the life cyclehas also surged. Observers warn that stock investing with borrowed money can suffer bigger blows when volatility increases and therefore demands caution.

According to trends in credit extension balances from the Korea Financial Investment Association, the total margin-loan balance at the end of last month was 35.7131 trillion won, more than twice the level a year earlier (17.5580 trillion won). On the 29th of last month, the margin-loan balance topped 36 trillion won for the first time.

What makes ‘debt-fueled investing’ frightening is not simply the possibility of losses, but forced selling by brokerages when share prices fall. Put simply, when a downturn arrives, you cannot do ‘hold on’.

At Tapgol Park in Jongno-gu, Seoul, that day, ‘KOSPI 7000’ became a talking point among the elderly. Mr. A (77), chatting in small groups with his middle-school classmates about stocks there, said, “Thanks to Samsung Electronics and SK hynix lately, my returns are good,” adding, “At our age, sources of income are limited, so we should invest only with spare cash. Even paying the interest is hard; you could end up out on the street later.”

Recently, however, debt-fueled investing by seniors aged 60 and over has increased sharply. Data on margin-loan balances by age group (combined top 10 brokerages) obtained by Rep. Kim Sang-hoon of the National Assembly’s Political Affairs Committee from the Financial Supervisory Service show that as of the end of March, the balance for those 60 and older was 8.0189 trillion won, up by more than 4 trillion won from a year earlier (3.9465 trillion won). This was the largest increase among all age groups. In absolute terms, those in their 50s had the most, at 8.9762 trillion won.

With semiconductor companies boasting unprecedented earnings leading the domestic market, problems stemming from debt-fueled investing may not surface immediately, but observers say investors should keep potential volatility in mind. Some even argue that Korea’s current situationmarked by a steep rise in borrowing to investevokes 1929, when the U.S. market crashed.

Lee Min-hwan, a professor of finance and management at Inha University, said, “For now, the rally continues because semiconductor companies’ results are supporting it, but it is difficult to predict exactly how long it will last,” adding, “You should invest with the awareness that there are risk factors arising from debt-fueled investing.”