The panic index has dropped to 9—I reviewed three extreme panic experiences over the past decade and summarized 3 life-saving rules.

$NASDAQ Composite Index(.IXIC.US) $Cboe Volatility Index(.VIX.US) $Dow Jones Industrial Average(.DJI.US)

First, the conclusion: The CNN Fear & Greed Index (0 to 100, lower means more fear) has dropped to 9, one of the lowest levels in recent years. The last single-digit reading was in April 2025 (tariff panic), and the one before that was March 2020 (pandemic). The market saw significant rebounds after both of those times—but that doesn't mean you should rush in to buy the dip now. If you've been losing money and feeling anxious these past few weeks, this is for you.

I've been trading stocks for ten years and have experienced three moments when the fear index hit extremes. At the end of 2018, with the US-China trade war and rate hikes, I was fully invested in Chinese concept stocks. I held on for three weeks but couldn't take it anymore and sold half. The market bottomed the very next day. In March 2020, during the pandemic panic, I didn't sell but thought airline stocks were cheap and rushed in to buy the dip—airlines ended up falling for three months longer than the broader market. In 2022, with the Fed's aggressive rate hikes, I waited patiently on the sidelines for three months, only to miss a 15% rebound. Three trades, three regrets. But the one that lost the most money was in 2020: rushing in just because it seemed cheap.

What did these three experiences teach me?

Retail investors lose money during panic mainly in three ways. First, selling at the deepest point of panic—selling at the bottom. Second, rushing in to buy the dip as soon as the panic starts—digging a deeper hole. Third, constantly switching positions—switching to tech today, energy tomorrow, and selling everything the day after, getting hit from both sides. All three mistakes share a common root: making decisions based on emotion, not rules.

What happened historically when the fear index hit single digits?

In April 2025, the fear index dropped to around 3-4 (Trump tariff panic). The S&P 500 then rose about 30% within six months. In March 2020, the fear index reached 2 (pandemic circuit breakers). The S&P more than doubled from its low point over the next 18 months. These two were indeed great buying opportunities. But in 2022, the fear index lingered in a low range for several months, and the S&P fell further before truly bottoming.

So a single-digit fear index is not a buy signal; it's a signal that sentiment has reached an extreme. It tells you that the bottom is probably not far away—but it doesn't tell you how much further it will fall or for how long.

What should you do now? Three life-preserving rules

Rule 1: Check if your portfolio can withstand another 10-15% drop. If not, use the next rally to reduce your position to a level that lets you sleep at night. How to reduce? Prioritize selling those stocks you're only holding onto because they've fallen so much—these are the ones you should clear out during a correction. Selling them isn't capitulation; it's making room for the positions you truly believe in.

Rule 2: Don't switch positions during panic. Constantly switching and getting hit from both sides is the most classic way retail investors lose money during adjustments. If you really want to make a move, set a rule for yourself first—for example, "I'll only consider adding when the VIX falls below 25" or "I'll only add to tech if Brent crude stays below $95 for a week." The long-term results of rule-based actions versus impulsive ones are worlds apart.

Rule 3: Turn off the intraday noise. When the fear index hits 9, your social feeds, short videos, and forums are filled with talk of an impending crash and calls to buy the dip. Both types of voices amplify your emotions. The most valuable action at this time is often—to do nothing for now.

My position: Zero trades from March 4th to today, nearly four weeks. Several lines—VIX at what level to reduce, Brent at what level to stop adding, only move on Hong Kong stocks when Southbound flows turn positive—none have been triggered. Just sitting tight.

The fear index is at 9. The market is asking you: Are you scared? The real question isn't whether you're scared, but what you'll do after you get scared.