Can the ‘5 Stages of Grief’ Predict When the Stock Sell-Off Will End? | Global News Avenue

The political and economic uncertainty that has dragged U.S. stocks in recent weeks has made it difficult for investors to predict when stocks will find their foundation.

Retail investors Analysts at Vanda Research said the activity shows we are in one third of five psychological stages of typical market downturns.

“Retail behavior around the decline in the stock market looks a lot like the abbreviation of five sad models by Kübler-Ross,” analysts Marco Iachini and Lucas Mantle said in a note released Thursday.

Selling in U.S. stocks intensified on Thursday, sending benchmark S&P 500 to it First correction since October 2023. The recent defeat was mainly caused by uncertain Donald Trump imposes tariffs around Donald Trump’s inappropriate threat, which economists say could spur inflation and weigh growth.

5 Stages of Sadness in Stock Market

Vanda analysts break down the stage and its characteristics in the following ways:

1. Rejection: Retail investors “buy dipping sauce” because analysts believe the fundamentals are still strong.
2. Anger: Some retail investors begin to surrender and often blame external forces (e.g., Fed policy, geopolitics, algorithmic trading).
3. Bargaining: Retail investors start to accept the downturn and wait for sale in relief rally. Funds rotate into defensive stocks.
4. Depression: Market sentiment hits its lowest point as investors succumb and compare it to past crises.
5. Acceptance: Volatility fades as investors begin redistribution to premium stocks at discounted prices.

So where are we now?

Iachini and Mantle said the retail deals show that we are currently in the bargaining stage. Retail investors take “DeepSeek Monday,” according to Vanda research data. A week later, when Trump bought another $1.55 billion First, tariffs are imposed On Canadian and Mexican goods. These Iachini and Mantle believe that these are moments of refusing to “buy immersion”.

In February, the market may have entered a “angry” phase when retail investors increased the purchases of retail investors amid tariff uncertainty.

Vanda’s data suggests retail investors started selling during relief rally in late February, a sign of a “bargaining” mentality. Concerns about slowing economic growth encouraged the transfer to the huge seven and spinning out of the little hat, another sign that investors are bargaining rather than surrendering.

The next stage, theoretically, is “depression”, with Iachini and Mantle saying some indicators suggesting we are already there. According to a weekly American Investors Association survey, investor sentiment has been overwhelmingly bearish. But, contrary to typical “depressive” behavior, retail investors have not cut their equity exposure as Vanda’s data does.

Institutional InvestorsAt the same time, trading is like a bear. Iachini and Mantle pointed out that in August 2024, the signal to encourage U.S. reserves were encouraged in August 2024 (August 1224) before retail investors followed suit.

“The jury still follows a similar pattern on whether today’s sell-off will follow.” “The lack of reliable macros (growth) will shift our focus directly Retail Stream For signs at the bottom of the market. ”