Source: Ran Finance; Authors: Yan Lijiao, Su Qi, Jin Yufan, Meng Yana; Editor: Zhou Changfan
We are witnessing a market event that Warren Buffett, in his 89 years, has never seen before.
The past week has been a rollercoaster for U.S. stocks. As the pandemic worsened in the U.S. and the Federal Reserve's initial rescue measures failed to calm markets, equities plunged at the open on March 12. All three major indices dropped over 6% at the bell. Within five minutes, the S&P 500 fell 7%, triggering the market's second circuit breaker of the week and halting trading for 15 minutes. Following the Dow Jones Industrial Average's entry into a technical bear market, both the Nasdaq and the S&P 500 followed suit.
In an unprecedented move, U.S. markets triggered circuit breakers twice in one week, while stock exchanges in eight other countries did the same in a single day. This historic capital flight has sparked widespread fears of an impending global economic crisis. According to the latest Bloomberg Billionaires Index, the world's 15 richest individuals lost a combined $46.4 billion overnight, and investors with large equity positions suffered heavy losses.
"U.S. stocks have seen a massive run-up over the past decade—the Dow alone rose nearly 10,000 points last year. The circuit breaker rules, established decades ago, feel particularly severe under today's market conditions. But overall, this is a perfectly normal market correction," said Xu Huaze, Managing Partner at E-Capital Management. He views the circuit breakers as a natural phenomenon. The past 11 years are widely considered a bull market, during which many U.S. companies inflated their valuations through debt-fueled share buybacks. Sun Peng, Managing Director of Xiaomi Strategic Investment and a significant investor in U.S. equities, argues that the current decline isn't a crash, but a return to reasonable valuations.
Amid the extreme volatility, investor outcomes diverged dramatically. Some profited handsomely from the swings, while others saw the situation as both a challenge and an opportunity—a true test of psychology.
Why do investors hold such contrasting views on this global event? Is now a good time to trade U.S. stocks? Could a U.S. downturn create opportunities in China's A-share market? Should investors buy stocks, hold cash, or seek safety in gold? Six investors offered their distinct perspectives.
U.S. Stocks Are Overvalued; A Correction Could Bring Prices Back to Reality
Sun Peng, Managing Director, Xiaomi Strategic Investment; 4 years of investing experience
I have a substantial portfolio of U.S. stocks, with a particularly large position in Tesla. Tesla's current share price is over $540—nearly halved from its peak—and I've taken significant losses. Tesla is actually one of my better performers; many of my other holdings have already fallen back to their levels from October 2019.
This highlights a core problem with U.S. equities: severe overvaluation. Take Tesla: its share price was only around $180 in the middle of last year. While two consecutive profitable quarters justified a year-end doubling, its price skyrocketed to over $1,000 by January. Even after falling below $500, it's still up more than 300% from its mid-2019 level. Apple shows a similar pattern: its earnings have been relatively flat for two years, yet its share price doubled.
These stocks move with the broader market, and sharp, unexplained rallies inevitably correct. In my view, Tesla's valuation is still high, and further declines are possible.
U.S.-listed Chinese stocks fall into two categories: those traded mainly by Chinese investors and those actively traded by U.S. investors. For the first group—stocks that are almost exclusively held by Chinese investors—their performance has little correlation with the broader U.S. market. Many of these companies list in the U.S. because they can't access domestic exchanges, yet U.S. investors largely ignore them. When the broader market rises, these stocks don't follow; when it falls, they often remain unaffected.
U.S.-listed Chinese companies like Alibaba are influenced by both domestic and American markets, so they tend to move with U.S. trends. The good news is, these stocks are backed by the resilience of the Chinese economy. With the COVID-19 pandemic largely under control domestically, their declines have been relatively contained. Similarly, high-quality A-share companies haven't seen major drops—large-cap leaders fell by around 10% at most, with some even posting gains.
Despite two circuit-breaker halts, trading volume in U.S. markets remains strong. Stocks like Tesla, Apple, and Microsoft still see daily turnover of $10 to $20 billion. This high level of activity shows robust investor participation and suggests many still see opportunities in the market.
In my view, this isn't a market crash but a correction back to reasonable valuations. We saw a similar, and even sharper, broad market pullback from late 2018 into early 2019, with a full recovery not materializing until September that year. A circuit breaker only triggers if the Dow falls 5% or 7% in a day; it's common for the market to drop 5% over several days without hitting the 7% threshold.
My investment strategy avoids stocks that simply mirror the major indices. If a company's share price moves purely in lockstep with the broader market, ignoring its own fundamentals, I typically steer clear. Such stocks are often overvalued, and their prices will eventually realign with intrinsic value.
Given the current environment—with central banks flooding the system with liquidity and interest rates trending downward—holding cash in the bank guarantees a loss in real terms. Other major asset classes like real estate and gold also move with the broader market, meaning losses are widespread. Personally, I prefer equities; shares of quality companies will inevitably rise over time. Of course, this requires understanding the stock market, thoroughly researching companies, and being prepared for the associated risks. Investing blindly without knowledge is a sure path to losses—after all, how would anyone else make money?
U.S. equities are still overvalued. Stock valuations are intrinsically linked to interest rates. With widespread expectations for rate cuts—potentially to zero or even negative territory—it's inevitable that equity markets develop bubbles. However, the actions of the Federal Reserve and the U.S. government are highly unpredictable. My advice is to maintain substantial cash reserves and avoid chasing maximum returns at all costs.
Currently, cash makes up 70% of my portfolio. If you believe a company is overpriced, don't buy it. Avoid chasing momentum, and never bank on a "greater fool" to bail you out—that mindset leads to losses. True profits in equity investing come from a company's earnings, not from other investors' losses. This perspective fosters a much healthier investment psychology.
Exited Entire U.S. Equity Portfolio in 8
After Holding U.S. Stocks for Nine Years
Xu Huaze, Managing Partner at E-Capital Management, 20-Year Equity Investor
Circuit breakers in the U.S. market are actually quite normal. Over the past decade, U.S. stocks have seen a massive run-up—the Dow Jones Industrial Average alone gained nearly 10,000 points last year. These circuit-breaker rules were established decades ago. Applying them to today's vastly larger and more liquid markets can make corrections seem alarming, but they represent normal market adjustments.
U.S. equities surged throughout 2019—a trend that surprised us. However, the U.S. economy operates with high leverage, and many corporations have issued debt specifically to buy back their own shares. This practice has driven numerous blue-chip stocks to repeated all-time highs, meaning the so-called bull market was already inflated with bubble-like characteristics.
We fully exited our U.S. equity positions in Q4 2018, held no U.S. stocks throughout 2019, and do not plan to re-enter the U.S. market within the next two years.
We decided to liquidate our entire U.S. equity portfolio in the fourth quarter of 2018 for several reasons. Our investment journey in U.S. stocks began in 2009, and over the following nine years, the portfolio generated substantial returns. We had significant exposure to internet and tech giants like Apple, Google, Facebook, Alibaba, and Momo—a sector I know well. We also held traditional U.S. blue chips such as Walmart, Costco, Nike, Starbucks, and McDonald's, all of which performed exceptionally. By 2018, we considered the portfolio a major success, both in terms of valuation multiples and absolute returns; the gains relative to our initial investment were almost staggering.
Another key factor was the escalating U.S.-China trade friction in late 2018. At its heart, this tension reflected a growing American apprehension toward China—a sentiment that inevitably triggers significant policy shifts. Faced with such geopolitical uncertainty, we moved all our U.S.-denominated capital into gold. In my view, gold remains a sound asset for preserving value.
While U.S. equities influence China's A-share market, A-shares have their own dynamics. First, their gains over the past five years have been minimal compared to U.S. stocks, creating a low valuation base. Second, the Chinese government has significantly increased liquidity during this period, and this surplus needs somewhere to go. With tighter controls on the real estate market, a substantial amount of capital that would have flowed into property is now finding its way into A-shares, providing upward momentum.
So, are there opportunities? I believe A-shares do present them—but I strongly advise investors to consider mutual funds over individual stocks. The risk profile of single A-share stocks remains extremely high, far surpassing that of their U.S. counterparts.
Personally, I believe established internet and technology companies—regardless of nationality—are worth holding once they reach a certain scale. Within this sector, whether U.S.-listed or Chinese ADRs, companies can be grouped by market cap. Those valued above $5 billion are unlikely to suffer severe downturns even in a bear market, as the pandemic has only underscored the critical role of mobile internet.
Companies in the $1 billion to $5 billion range include some Chinese ADRs that often fly under the radar of major U.S. institutions. Their funding sources are less conventional, leading to higher volatility—sometimes even sharp, knee-jerk sell-offs on minor news. Internet and tech firms below $1 billion are even more volatile. Their backing capital often pursues short-term, sentiment-driven strategies, a tendency that becomes pronounced during market downturns.
Greater Volatility Reinforces Conviction in Value Investing
We Invest in Stocks of Disruptive Innovation Companies
He Kangrui, Investment Director at InnoAngel Fund, 6-year investing experience
I was in Canada during the 2008 financial crisis and witnessed it firsthand—watching oil prices drop daily from over $100 to below $60.
U.S. equities have been in a bull market for a decade since that crisis. Yet, with unemployment recently hitting a 10-year low, it signaled that U.S. economic growth might have peaked.
Something felt off: amid high labor costs and stagnant productivity, such low unemployment suggested heavy-handed government and industrial policy—which carries significant side effects. Starting in late 2019, global "black swan" events multiplied: escalating U.S. trade protectionism, compounded by the pandemic, foreshadowed major equity market volatility.
During the Spring Festival holiday, I predicted that China's high level of public cooperation would contain the virus quickly. I resolved that once the U.S. reported its first confirmed case, I would buy the triple-leveraged Nasdaq short ETF (SQQQ) to hedge my U.S. equity exposure. When the U.S. soon announced its first suspected case, I purchased SQQQ a few days later and gained nearly 15%.
The U.S. proved far less resilient to COVID-19 than expected. First, it underestimated the virus's severity; second, public compliance was low. In a country that prizes personal freedom, government restrictions faced strong resistance, making containment both slower and economically far more costly than in China.
When the pandemic was declared, futures markets panicked first. Oil futures crashed, and the resulting price crisis sent U.S. equities into a tailspin. The market-implied probability of a 100-basis-point Fed rate cut in March skyrocketed from 41.1% to 66.8%, effectively forcing the Fed's hand.
In theory, rate cuts should spark a V-shaped recovery. I shorted the market by buying SQQQ (the triple-leveraged inverse Nasdaq-100 ETF)—a trade that should have lost money. Instead, I profited. This tells me that even Fed intervention can no longer reliably rescue the stock market.
However, I believe this downturn is fundamentally different from the 2008 crisis. Back then, systemic fraud was rampant: Wall Street repackaged BBB-rated junk into AAA-rated securities, creating a massive "hot potato" game where everyone was deceiving each other. The current crash, by contrast, falls within a predictable range—there's no need for excessive alarm.
China's relatively swift control of the pandemic has caused the market to stop shorting Chinese assets and even start going long. As China opens its domestic markets and rolls out supportive policies, its national-level anti-fragility is strengthening. In contrast, economies overly reliant on a single revenue stream show weaker crisis resilience and slower responses—a vulnerability reflected in their equity markets and contributing to the global circuit-breaker wave.
Saudi Arabia is a prime example: it reaps enormous profits when oil prices are high but plunges into crisis when they crash. China, however, is like a "giant spider," supported by a diverse array of industrial pillars that sustain its productive vitality.
Although the bull market is officially over, my stock strategy remains unchanged. My current portfolio includes Bilibili, iQIYI, Luckin Coffee, and Pinduoduo. I'm still holding Bilibili, which I bought at $13.75. Even if it falls to $24, I'm still in profit—the margin of safety is exceptionally high.
The more volatile the market gets, the more I believe in value investing. Among Chinese internet stocks, I invest in all disruptive innovators because I understand their business models more deeply than most.
My advice to retail investors is simple: avoid blind investments and don't try to catch a falling knife. You can never know where the true bottom is—that's precisely why retail investors (the "韭菜") keep getting burned. I once saw an extreme case: someone claimed to have "caught the bottom" ten weeks in a row, buying the dip every week, only for the company to eventually delist. Right now, the best strategy might be to stay on the sidelines.
Even if this U.S. economic crisis doesn't erupt now,
it's only a matter of time before one does.
— Zhang Junkai, Ph.D. in Telecommunications, 7 years of trading experience
I exited U.S. equities years ago, judging the risks too high. Now, I only hold A-shares. While recently impacted by U.S. market turmoil, the volatility has been limited, and I'm still up for the year.
Since I left, the U.S. market has continued hitting new highs. But no one can predict tomorrow or make reliable short-term forecasts. My strategy is simple: when I judge a market to be excessively overvalued, the only rational choice is to exit. Timing that exit, however, is always uncertain.
From "Black Monday" to "Black Thursday," the recent U.S.-led market crash was triggered—not caused—by the pandemic and the oil crisis. The root cause is that U.S. stocks had risen for 11 straight years, becoming severely overvalued and bubble-like.
Historically, the U.S. economy has faced a major crisis roughly every decade. The Asian Financial Crisis, sparked by the devaluation of the Thai baht, hit in 1997–1998, followed by the U.S. subprime mortgage crisis that triggered a global downturn in 2008. With eleven years having passed since the last one, even if the timing isn't exact, another economic crisis is likely on the horizon. Should the U.S. experience a significant downturn or even a sharp correction, global assets would almost certainly feel the pain.
However, U.S.-listed Chinese stocks (often called "China概念股") have shown relative resilience. In fact, their bull run started five or six years ago. This is partly because many high-quality Chinese firms, unable to meet A-share listing requirements, turned to U.S. exchanges. Additionally, the primary investors in these stocks are either based in China or are overseas institutions with deep China expertise—essentially representing Chinese capital, which remains somewhat insulated from shocks in the broader U.S. market.
While we can't predict if the U.S. will slide into a crisis or whether its equities will stabilize or fall further, we can assess the A-share market on its own merits.
The A-share index has been hovering around the 3,000-point mark for over a decade. This year, it's traded in a tight range between 2,800 and 3,000. At around 2,800 points, the downside appears limited.
Overall, A-shares don't show signs of major valuation bubbles. Many listed companies have solid fundamentals, with tech stocks performing strongly and consumer stocks holding up reasonably well. My personal portfolio is weighted toward consumer stocks, with a smaller allocation to tech. Frankly, tech stocks still carry some bubble risk; if conditions worsen, I may sell my tech holdings.
The Federal Reserve has already stepped in to stabilize markets, with central banks worldwide following suit with aggressive monetary easing. China is also rolling out stimulus measures. While this could fuel inflation, it doesn't guarantee higher asset prices.
From an asset-allocation perspective, I recommend Chinese investors hold a significant portion of their assets in cash during periods of stock market volatility. Cash is king. Consider allocating about a quarter to a third of your portfolio to consumer-oriented A-share stocks. After all, even in a crisis, people still need to eat and drink.
That said, some assets deserve modest allocations—gold, for instance. In contrast, Chinese real estate, premium baijiu, and similar assets look overheated and carry elevated risk.
As stock markets continue to fall, safe-haven capital flows will rise.
Gold looks like the next compelling buying opportunity.
Tim — U.S. Equity Short Seller | 2 Years of Trading Experience
I primarily trade short positions on U.S. equities. My shorts tripled over the past two weeks, peaking on Thursday, March 12, before pulling back slightly on Friday. For experienced short sellers, a 2x–3x return isn't unusual. Yet, profiting from a once-in-a-decade crisis offers not just financial gain but a unique psychological thrill.
Recent events—including two circuit-breaker crashes and two circuit-breaker rallies—are exceedingly rare, perhaps a once-in-a-lifetime occurrence. This kind of volatility favors highly agile short-term trading; otherwise, you risk getting "scalped." I may partially close positions next Monday, depending on the market. Following the Fed's meeting on March 18, a significant rate cut is widely expected.
I believe a rebound is highly likely. However, there's a risk that investors could interpret any rally as a trap and rush to exit even faster, turning it into a pure psychological battle. No one can predict the outcome with certainty, and short sellers face high risks of margin calls. Whether the market trends sideways or remains directionless is unpredictable. Traders with boldness and foresight who buy instruments like TVIX or go long on the VIX "fear index" can reap outsized gains. Still, such profits often involve a large dose of luck and can easily be erased by subsequent losses.
The current stock market turmoil can be traced to three main factors: the oil price crash, the pandemic, and the end of an 11-year bull run. Caught in this three-way squeeze, U.S. shale oil producers have been hit hardest. Many still underestimate the severity of the pandemic in the U.S. While the country is large and spread out, healthcare is simply unaffordable for many ordinary Americans. As senior officials worldwide test positive, fear continues to grip the markets.
It's widely accepted that the bull market started in 2009 and ran until two weeks ago—a bubble that was bound to pop. Every investor knew it was there; the moment trouble appeared, everyone rushed for the exit, causing a stampede. Central banks globally are slashing rates ("turning on the taps"), but seem to have few other tools left. I believe a third circuit breaker is inevitable—the timing is the only question. It could be next week, or perhaps in June or July. Some short-sellers will likely capitalize on this.
Once a clear bear market in equities is confirmed, gold becomes an attractive buy. These two assets often fall together initially before diverging.
I wouldn't say a full-blown crisis has arrived yet—America's greatest weakness is its debt burden. Right now, U.S. stock volatility is extreme, dragging even traditional safe-haven assets down with it. In a true crisis, it's normal for safe havens to fall alongside stocks at first, but they eventually decouple: stocks keep falling while safe havens rally. Keep a close eye on U.S. debt levels, corporate bond markets, unemployment, and other key indicators—crises always unfold as a cascade of chain reactions. With so many possible paths forward, accurately predicting the outcome is nearly impossible.
From a valuation standpoint, A-shares offer foreign investors some safe-haven appeal. Certain A-share companies deliver solid returns. Large institutions look beyond price momentum to metrics like P/E ratios. Foreign assets have seen sharp declines, pushing their P/E ratios down significantly, while domestic markets still contain undervalued companies.
Sectors I'm looking to buy into next:
Blue-chip stocks, tech stocks, and leading "white horse" stocks.
Tony, Self-Media Entrepreneur, 4 Years Trading Experience
Since early March, including paper losses, I'm down about RMB 150,000 to 200,000.
When the market crashed, my first reaction was shock—I hadn't expected such a powerful collective sell-off. However, I believe all losses stem from gaps in my own knowledge and understanding, so I accept them. I do expect prices to recover eventually.
For now, I'm holding my positions, but I'm also assessing whether these are truly quality companies—if not, I'll cut my losses. During volatile periods like this, I advocate for long-term dollar-cost averaging: at least six months to a year for U.S. stocks, and one to two years for A-shares.
The pandemic's impact on stocks is like a surface wound—likely affecting just one quarter—and recovery is possible once we get through it. I attribute the U.S. market circuit breakers to four causes: First, public panic driving massive redemptions from stocks, mutual funds, and even cryptocurrencies into cash. Second, some less emotional investors seeing the panic and redeeming preemptively to buy back in at lower prices. Third, the oil price war between Russia and Saudi Arabia. Fourth, excessively high valuations across U.S. equities.
The pandemic remains poorly controlled abroad and could worsen significantly, making a third circuit breaker highly likely. Right now, it's impossible to say if the U.S. bull market is definitively over; recent events may just reflect short-term turbulence.
For individual companies, I set a target price range and only buy when it's reached. If targets aren't met, I might simply dollar-cost average into broad market indices. During this period, sectors with strong cash flows should hold up better. With a global slowdown reducing liquidity, "story-driven" sectors carry higher risk. Technology looks promising—its innovations help mitigate the pandemic's impact and boost societal efficiency, especially in areas like big data, 5G, and AI.
Going forward, I plan to keep buying shares in industry leaders, tech stocks, and blue chips. I'll also allocate a small portion of my portfolio to gold. Right now, only about 10% of my total assets are invested, which allows me to tolerate higher risk. However, if someone had 50% to 70% of their assets in the market, I'd suggest trimming some positions, as we can expect volatility to continue for a while.
We're not in a full-blown economic crisis yet, but the downturn has led to corrections across many companies. The market is at an inflection point—shifting from expansion toward contraction—though the transition isn't fully clear. Once the pandemic is brought under control, confidence should recover quickly.
Global capital markets will likely remain volatile for the next six months or so. During this period, investors should focus on risk management and may find opportunities in undervalued companies. In short, risk and opportunity go hand in hand.