The U.S. stock market has been trapping investors recently!
One counterintuitive aspect of the stock market is that high prices can keep rising until they attract most of the people who were initially too afraid to buy, and then suddenly collapse.
The latest example is CRCL, where many got trapped around 250. When it surged to 300 that day, many saw the pullback and decisively jumped in, only to face a sharp drop.
Personally, the most striking example for me was MSTR's rally last year, which soared to 540 at its peak. After a 13% intraday gain, it plummeted by 20%—the most brutal case of harvesting naive investors I've ever seen. Many were liquidated or suffered massive losses during that surge and crash.
Even Tesla, after climbing to 488 late last year, suddenly dropped 8%. U.S. stock adjustments are incredibly fierce—even crypto traders find them terrifying. The night session often tricks you, luring you in with early gains.
Moreover, the explosive rallies in U.S. stocks are downright frightening. CRCL surged six to seven times within half a month of its IPO—who could resist that temptation? Early entrants were cautious, but after tasting profits, they increased their positions, only to get trapped. Retail investors are played like this, left gasping for breath.
Last night, many companies also harvested naive investors—hims, oklo, tem, and several quantum computing stocks opened with huge gains before nosediving.
These swings of over 10% in either direction crush anyone chasing highs or betting on rebounds. Never assume U.S. stocks are easy money—most people can't control themselves and end up buried in this graveyard.
Many think A-shares are easier to lose money in, but the reality is that only a handful of stocks are hot at any given time. Due to daily price limits, most can only buy second- or third-tier stocks, making small gains over a few weeks. At least by avoiding chasing highs, losses are less numbing. Because A-shares are prone to losses, many are naturally cautious.
U.S. stocks are the opposite—they rise relentlessly, luring people in. Chasing highs means getting trapped, especially during recent volatile swings. Many still missed out on this big rebound.
Instead, they lost heavily by chasing highs. So, respect the market is crucial everywhere, especially this year with its extreme volatility. Wild swings are exhausting.
I’ve been bullish on semiconductors for two months, but I believe once NVIDIA also shows a big red candle, it’s time to exit.
Last year, NVIDIA’s rally was even fiercer—every morning felt like counting money until it suddenly reversed at 140+. Since then, NVIDIA has been tough to trade. This year, with DeepSeek’s sudden rise, NVIDIA dropped over 10% for days straight—terrifying.
These experiences made me cautious. When the market feels fragile, I keep reducing positions, letting only the strongest runners perform or targeting deeply oversold sectors. The rest I trim slowly, waiting for opportunities.
Even in normal year, U.S. stocks correct two or three times—let alone this turbulent year. I never get overly optimistic because that’s often when disaster strikes.
2025 will surely be a volatile year, digesting the gains of the past two years. Discipline is paramount, so plan your position management carefully. Those who value strict discipline are welcome to join our community.
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