06.03.25 - FOMO vs. Fear

The battle over tariffs between countries is not the only one unfolding. Financial markets have become another battleground. Investors driven by FOMO (fear of missing out) clash with those gripped by fear, leading to significant market swings in recent days.
This volatility persists even as an indicator of investor sentiment has been signaling "extreme fear" for several days.

Meanwhile, the ECB lowered its benchmark rate by 25 basis points today to support and stimulate weak economy.

Markets: China stock market continued to rally, European markets with a rebound in the later trading session ending the day mostly in the green. In the US, tech sell-off continues, USD weak and Euro declines against Swiss franc after the latest fast increase.

My view: At the moment, economic data has taken a backseat, yet it remains more important than ever to monitor. Investors are chasing the markets, with speculative money rushing to "buy the dip" at any sign of opportunity, largely driven by hope and past experiences. This strategy has worked well in recent years. However, as mentioned before, this time is different. Many speculators, lacking market experience, have never faced significant losses and continue to rely on the belief that buying the dip will always pay off.

This speculation is fueling irrational market movements, creating both risks and opportunities. Recently, the euro has strengthened on hopes of a recovery, spurred by potential stimulus measures. However, I remain skeptical that Europe will stage a meaningful turnaround, especially given the heightened uncertainties compared to just a few weeks ago.

As a result, I made a significant adjustment to my investment strategy today, hedging the euro against the Swiss franc at 0.9592, before the European Central Bank announced its rate cut.

Become a member to access more valuable market updates like this.