MARKET PHASE · CRASH
Falling market
Moves most when prices fall
A stretch where the index falls sharply and paper losses on the stocks you hold grow noticeably
Reaction by phase and the gap
Highest minus lowest of the three phases
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Answer the questions and your reaction in each of the three phases and the gap between them will appear here.
Surging market
-Falling market
-Sideways market
-With 4 questions per phase, the value moves only in steps of 25. Answering one question differently moves that phase’s value by one step.
A high value in this phase means you often rethink decisions made in advance while prices are falling. Which of the three phases was larger is shown in the bars above.
What it means
Rethinking in a falling market is a natural reaction. A falling price means much of the market has started to see something differently, and that majority is often right. Doing nothing is not always the right answer.
The standards reset in this stretch, though, usually move downward. The most common form is redrawing the line you meant to hold once it is actually crossed, and the reason given is "the situation is different from then". The situation has indeed changed, but whether you already had this kind of situation in mind when you drew the line should be recorded alongside.
A large reaction in this phase also means you respond quickly to bad news. If something really has gone wrong at the company, this reaction reduces losses. The problem is that this reaction alone cannot tell apart a case where nothing happened at the company and only the price fell from one where something did.
How it shows up
- On a day the index falls sharply, you look into what happened and decide what to do that day
- For a stock with a growing paper loss, you first weigh lowering the average price
- When only the price falls while results hold, you suspect the market knows something first
Traps that arise only in this phase
- The line set in advance gets redrawn the moment it is crossed. The point of setting the line was not to trust yourself at that moment, yet at that moment the reason looks weakest.
- Your entry price becomes the standard. What kind of company it is has nothing to do with the price you paid, but the profit and loss display keeps tying the two together.
- Lowering the average price stops being a decision and becomes an attempt to win back a loss. Choosing to own more of the same company and choosing to make a loss look less painful can have the same result but rest on different reasons.
If your value came out low
If your value in this phase came out low, you rarely change your decisions in a falling market. You may hold a wrong decision for a long time, but you also rarely lower your standards just because the price fell.
The Jupick grade in this phase
Even if a share price halves, the Jupick grade stays almost the same. For Korean stocks all nine metrics that make up the grade come from financial statements and dividend history, and for overseas stocks at most one metric, dividend yield, uses the price. That fact is no comfort, but it does separate two things. If the grade is unchanged after the price fell, nothing has shown up in the financial metrics yet. If the grade falls later, what changed then was the financials, not the price. For Korean stocks that moment is the next financial filing. To see what changed and when, it helps to keep those two moments apart.
Worth reading in this phase
What the other two phases look at
This assessment is reference content that describes differences in reaction across market phases. It is not a suggestion to trade any stock or product and not investment advice. Investment decisions and their responsibility rest with you.