Over the span of just two weeks, the VN-Index has seen multiple sessions with losses of 20-30 points. During these periods of market turmoil, online forums and investment groups have erupted with complaints and finger-pointing.
Emotional Rollercoaster
Investment discussion forums in recent days have been inundated with threads lamenting losses, farewell messages to the stock market, and accusations aimed at regulators. Many investors are scrambling to find explanations for the market's turbulent behavior: Savings interest rates have hit record lows, so why isn't the market surging? The massive influx of maturing savings should boost liquidity, so why is it "dwindling"?
There are allegations of securities firm XYZ unfairly slashing customers' margins, ABC company's trading system crashing at inopportune moments, brokers issuing buy recommendations while self-dealers are selling, and even some threads dragging stock gurus into the fray with curses and accusations. Some Zalo group leaders have quietly abandoned their chat rooms, leaving members helpless and nursing significant losses.
These tragic scenes seem to replay themselves with each market cycle, yet many investors find themselves caught in the same trap every time. The majority of those who have incurred losses attribute their misfortune to the stock market's "abnormalities" and claim to be victims of manipulation or even scams perpetrated by business owners.
The pain of financial loss is understandable because, despite the market correction not being exceptionally severe or prolonged, the extent of damage varies greatly among different stocks. Since reaching its peak in early September, the market has retraced about 11%, but numerous stocks have experienced declines exceeding this figure. Data from the HoSE reveals that nearly 100 stocks have lost at least 20% of their value, but when accounting for losses relative to the index, the number climbs to nearly 230 stocks.
What has compounded the damage is that during the four consecutive weeks of correction, there were still sessions in which the market rallied, moved sideways, or experienced several consecutive positive days. During these brief respites, investors optimistically believed that the market had hit rock bottom and rushed to buy, often leveraging their accounts as their cash dwindled. Subsequently, the market continued to adjust downward, compounding their losses. In recent sessions where the market dropped 30-40 points, there has been additional pressure from margin call activities by securities firms, typically occurring after 2 p.m. Under such immense pressure, investors naturally find themselves bewildered, disappointed, and disheartened.
These types of risks and pressures are not new, but investors often seem to forget them, especially newcomers who have recently entered the market and are experiencing these challenges for the first time. Statistics on the number of new accounts opened between May and September, during the period of the most significant influx, indicate that approximately 762,000 individual investors entered the market. Long-term investors typically don't open many new accounts, so it's likely that hundreds of thousands of these new accounts have never encountered the bitter side of the stock market.
"Abnormal" for Shareholders, "Normal" for Cash Holders
While some within the investor community engage in complaints, blame games, and even cursing, there are others who remain composed in the face of the current market turbulence. Indeed, when the market reached its peak or shortly thereafter, many experienced investors, including those who had just "graduated" in 2022, sounded the alarm.
On the other side of the coin, when investors eagerly poured their funds into stocks, others had to sell to provide liquidity. For nearly three weeks, from September's peak onward, trading sessions on the stock market frequently saw volumes in the range of VND 30 to 36,000 billion. In a short-term market, trading simply involves one party exchanging their shares for another party's cash. Thus, while hundreds of thousands of investors holding shares find themselves in a bind, there are still hundreds of thousands holding onto the cash they received from selling, and they see the market situation quite differently.
Therefore, whether the current adjustment period is viewed as "abnormal" or "normal" depends on one's perspective. Clearly, those holding onto cash do not find the market unreasonable at this juncture, as they are not under pressure to incur losses and still have significant opportunities.
From an objective standpoint, it's natural for the stock market to experience fluctuations. The market saw a roughly 20% increase on the VN-Index from May to early September. Even if we consider the period starting from the market's low point in November 2022, which marked the beginning of the last upward cycle, the gain stands at over 40%.
The current correction of approximately 11% from the peak is well within the realm of normalcy. For instance, take QCG stock, currently undergoing its most substantial correction with a decline of around 30%, despite having surged by 272% from May to September. Or consider the VIX, which has recently retreated by about 27% from its peak; this decline pales in comparison to the 198% increase witnessed from May to March.
