What is the terrifying aspect of a downtrend?

1. Long Cycle.

In terms of form, the most frightening aspect of a downtrend is that the “cycle” is particularly long. A short downtrend may last for a few weeks or even a few months, while a long downtrend can persist for 1-2 years, or even 3-4 years.

Although it seems that the short-term decline isn't significant, when the cycle is extended, the downward space of a downtrend can be more horrifying than a crash.

2. Large Decline.

If we look at each small cycle, the decline in a downtrend isn't considered large. However, if we calculate a complete downtrend cycle, you'll find that the overall decline of a downtrend is much larger than that of a crash.

3. Retail Investors Are Easily Deceived in a Downtrend.

A downtrend is a process that easily deceives retail investors:

During a downtrend, there will be rebounds, which can lead retail investors to have a sense of luck during the decline, thus blindly holding on; a downtrend is a slow decline process that can lead retail investors to “habitually” accept small daily losses while expecting to break even, evolving into the “boiling frog” scenario;

In a downtrend, the main force often spreads some positive news, leading retail investors to have misplaced confidence, ultimately resulting in “Don’t go, fellow villager!”

4. The long duration of a downtrend can cause retail investors to lose patience waiting for the bottom, causing them to exhaust their funds too early and buy in at high levels;

Therefore, for retail investors, compared to the ferocity of a crash, a downtrend is actually more brutal!