"Will You Miss Out If You Only Watch Samsung and Hynix in a Bull Market?... The Variable That Made Returns Up to 3 Times Higher [Experiment Note]"

U.S. Researchers Analyze 9,308 Listed Companies
"Corporate Location Also a Key Investment Variable"

Growth Stocks in High-Cost Areas Like New York and Silicon Valley
Tend to Yield Lower Returns
"Labor and Infrastructure Costs Have

Editor's NoteOne now or two if you wait. Do you remember the marshmallow experiment, which observed children's choices? Sometimes, simple research changes the way we see life. Let's reinterpret our daily lives through experimental data.

"Do you invest in stocks?" As the KOSPI rally continues, conversations about stocks have become noticeably more frequent among people around me. After being chronically trapped in the so-called "Boxpi" within the 2,000-point range, the KOSPI has been on a continuous upward trend, reaching an unprecedented 8,000 points on May 15. This surge was driven by the semiconductor supercycle, with major stocks like Samsung Electronics and SK hynix leading the rise. These stocks are now on the verge of breaking the "300,000 Electronics" and "2,000,000 Hynix" milestones.

The stock market is experiencing an unprecedented boom, fueling heated investment enthusiasm. Investors are now seriously considering which stocks they should buy next.

On the 15th, when the KOSPI index surpassed 8,000 points intraday for the first time in history, employees at the Hana Bank dealing room in Jung-gu, Seoul, are celebrating the breakthrough of 8,000 points in the KOSPI. May 15, 2026 Photo by Kang Jinhyung

U.S. Penn State Researchers: "Regions with Higher Housing Prices and Cost of Living Tend to Have Lower Investment Returns"

Recently, a team of American researchers focused on another variable that moves stock prices: the housing prices and cost of living in the regions where companies are headquartered. Researchers at Pennsylvania State University recently published a study in the Journal of Empirical Finance, analyzing the relationship between company headquarters location and stock returns.

The research team analyzed 9,308 companies listed on the three major U.S. stock exchanges from 2000 to 2019. The main point of this study was that, beyond a company's inherent growth potential, the location of its headquarters can significantly affect investment outcomes.

According to the research, companies headquartered in regions with higher housing prices and cost of living tended to offer relatively lower investment returns. In contrast, companies based in areas with lower living costs and real estate prices often recorded higher returns.

The researchers paid particular attention to companies in high-cost regions such as Silicon Valley and New York. In these areas, companies end up spending more on employee salaries, office rent, and various infrastructure maintenance costs. As a result, as more money is allocated to operational expenses, the returns available to investors may decrease.

Timothy Simin, a co-author of the study and professor at Pennsylvania State University, explained, "The location of a company's headquarters does, in fact, influence investment returns," adding, "Where a company is based can act as an important variable in portfolio performance."

"Companies in High Cost-of-Living Areas Spend More on Labor and Infrastructure"

This study also attempts to explain one of the long-standing puzzles of financial markets: the "value-growth premium" phenomenon. Value stocks are those that are relatively undervalued compared to their current performance or asset value.

Historically, so-called value stocks in stable industries such as manufacturing and healthcare have often delivered higher long-term returns compared to high-growth tech stocks. However, there has been a lack of clear theories explaining why this phenomenon occurs.

The researchers combined real estate market data with their analysis. After categorizing companies into value and growth stocks, they also looked at the housing price levels of the headquarters region. Growth stocks are those expected to have future sales and profit growth rates that far exceed the market average.

The study found that growth companies located in expensive residential areas recorded the lowest returns. The researchers noted, "In regions with a high cost of living, companies inevitably have to spend more on labor and infrastructure maintenance."

Investment Strategies Reflecting Company Location and Housing Prices Yield Up to Three Times the Returns Compared to Growth-Stock-Focused Portfolios

An interesting point is that the researchers developed an investment strategy based on this data. By constructing a portfolio that considers both company location and the local real estate market, the team found that this approach could potentially yield up to three times higher returns than existing growth-stock-focused strategies.

Of course, the researchers added that being based in an expensive area does not mean a company is automatically disadvantaged. Regions like Silicon Valley, where cutting-edge companies are concentrated, clearly have advantages in terms of technology exchange and talent acquisition.

Nevertheless, this study introduces a new variable to the traditional criteria for investment, which often only asks, "Is this a good company or not?" Going forward, when investing in a company, not only its performance but also the land prices and cost of living in the area where it is based should be considered. Although stock investments are often called "unearned income," in reality, they involve the mental labor of analyzing charts late into the night and poring over financial statements. Now, checking the neighborhood of a company should become part of that routine. After all, there is no stock that only ever rises. During market crashes, the psychological pain can be overwhelming. It makes you wonder if there is any other work as grueling as this.

This content was produced with the assistance of AI translation services.