Key insights
- The article questions the persistence of stock sell-offs despite a consistent two-year recovery pattern where dips are rapidly bought. It explores the underlying mechanics driving these drops, even when investors anticipate a swift rebound. The update notes the market has already recovered two-thirds of its losses, reinforcing the observed pattern.
Why do large-scale stock sell-offs still happen when the market's recovery pattern over the last two years has been so aggressively consistent? We frequently see a sharp drop followed immediately by a strong rally right back to previous levels, yet people seem to "fall for it" every time. If both retail and institutional investors know that these dips are bought up almost instantly, what are the actual mechanics driving the drop?
Update: As expected, the market has already wiped out 2/3 of the losses.