You probably have a friend like this. The market has been climbing for months. People in the group chat are posting account screenshots. Coworkers are bragging about which stock just ripped. Every few scrolls on your IG, Threads, or Facebook feed there is another profit screenshot showing “+38%.”
Then you cannot sit still anymore. You tell yourself: “This time it really feels like it is going higher. I cannot miss it again.” You hit buy with the money you had set aside for the mortgage. Then you get in. Then the market starts to drop.
This is not bad luck. This is not weaker judgment. This is your brain running a mechanism written into your genes tens of thousands of years ago, making the most expensive mistake of the 21st century for you.
Dalbar, the U.S. financial research firm, published its 2023 Quantitative Analysis of Investor Behavior report, which found that over the past 30 years the S&P 500 returned roughly 10% annualized, while the average retail investor actually pocketed only 3.98%. That 6-percentage-point gap does not come from retail investors picking the wrong assets. It comes from retail investors getting in at the wrong time and getting out at the wrong time.
What you buy was never the point. When you buy, and why you buy, is what decides how much money is sitting in your account 20 years from now.
Why Do You Only “Feel” the Rally After It Is Already Over?
Your brain is not a market-analysis tool. It is a machine designed to produce emotional decisions. The mechanism behind this is what behavioral economists call the availability heuristic, formally introduced by Nobel laureate Daniel Kahneman and Amos Tversky in the 1970s.
The logic is simple: when you estimate the probability of something, you do not look up data or crunch statistics. You estimate based on how easily the example comes to mind.
After three months of a rising market, every time you open your phone you see bullish news. Friends are posting gains. The group chat is full of “+25%” screenshots. So your brain concludes: “Rising markets are easy to recall, so buying now must be right.”
The problem: the moment the market is easiest to recall is almost always the moment it has already risen the most, which is exactly when risk is highest.
Look at a real Taiwan example. In 2021, the TAIEX rallied from 15,000 at the start of the year. Financial media front pages ran headlines like “TAIEX punches toward 18,000.” Google Trends data on stock discussion hit an all-time high. According to the Taiwan Stock Exchange, more than 1.2 million new brokerage accounts were opened that year, a record.
That same May, the TAIEX suffered a single-month drawdown of more than 20%. Of those 1.2 million new accounts, how many got in near the top? Do the math yourself.
This is not an isolated case. It is the script that replays in every bull market: market rises → media covers it → crowds pour in → market tops out → crowd gets trapped → everyone blames their luck.
The Behavior Gap: Numbers Prove What You Buy Does Not Matter, When You Buy Does
You probably do not want to hear this, but the numbers do not care about your feelings.
Morningstar’s annual “Mind the Gap” study tracks thousands of U.S. funds and compares two numbers: the funds’ time-weighted returns (what you would get if you bought and held without moving), and investors’ actual dollar-weighted returns (what investors really pocket after all their real entry and exit decisions).
According to Morningstar’s 2023 report, over the past decade investors actually received 1.7 percentage points less than the funds’ time-weighted returns on average. In higher-volatility categories the gap can reach 3 to 4 percentage points. This gap is professionally called the behavior gap, and it comes entirely from losses created by retail investors entering and exiting at the wrong times.
Even more direct evidence comes from historical data published by S&P Global and the Investment Company Institute (ICI): the largest single-day rallies in U.S. stock market history have frequently occurred during bear markets or right after extreme panic; while net inflows from retail investors have historically peaked within 1 to 3 months after the market hits a fresh all-time high.
You think you are chasing the rally. In reality, you are providing the exit liquidity for the people who got in earlier. You are not the market’s winner. You are the market’s liquidity provider.
And Taiwan retail investors have one extra mechanism that hits especially hard: herd behavior. On the PTT Stock Board, the Dcard Investing forum, on every LINE group, once a topic starts flooding these platforms, market sentiment is already at an extreme. Behavioral finance research shows that the heat of investment chatter on social media is highly positively correlated with short-term market tops — the louder the chatter, the closer you are to the peak.
The more people in your group chat are flashing gains, the more you should be on alert, not excited.
Media, Brokers, Social: The Market Itself Is Your Opponent
Many people think the market is a fair place. If your call is right you win. If it is wrong you lose. In reality, the market’s liquidity mechanism, the media’s coverage logic, and brokers’ revenue structure combine into an environment that is structurally hostile to retail investors.
Start with media. Financial media’s business model is traffic. Bull markets get clicks, so they give you bullish headlines. New highs are what people most want to read, so new highs get the most coverage. At market lows, nobody wants pessimistic content, so coverage thins out. You get far more market information at the top than at the bottom, so the top feels far more compelling.
Then look at brokers. Every time you place an order because “it feels like it is going up,” you generate a commission. Every time you cut losses because “it feels like it is going down,” you generate another commission. A retail investor who trades 100 times a year produces 50 times the revenue for the broker that a long-term investor who trades twice a year produces.
Brokers do not need you to make money. Brokers need you to trade. So any content that nudges you to act on your feelings is, by commercial logic, good for the broker and bad for you. This is not a conspiracy theory. It is the structural design of the system — the accusation is aimed at the structural logic, not any single institution.
Then there is the social media algorithm. The moment you start engaging with investing content, the platform pushes more profit screenshots and more bullish signals into your feed. Your information environment tilts more and more optimistic until you cannot resist jumping in. Winners share. Losers stay silent. Your sample is severely skewed. All of these mechanisms stacked together create an environment that makes you feel the strongest urge to enter at exactly the moment you should not.
The Real NT$5.02 Million Gap: Following Your Gut vs. Systematic Execution
Let us run the final numbers on both paths. Setup: a typical Taiwanese office worker with NT8,000 per month they can invest consistently, a 20-year horizon, and the investment target is an S&P 500-tracking ETF, using a historical 10% annualized return as the baseline.
Path 1: The retail investor’s gut-driven route. This investor waits for the feeling to be right before entering. Waits until the market has run, the vibe feels stable, and friends are all talking about it, then puts the NT$600,000 to work. Based on Dalbar’s behavior gap data, this kind of investor gets in 6 to 12 months late on average, and usually after the market has already rallied 20% to 30%. After entering, they wobble at the first meaningful drawdown, make roughly 4 bad timing errors over 20 years, each costing 2 to 3 percentage points of actual return. Layer in commissions and FX friction, and the real annualized return comes out to about 4%.
Over 20 years, the NT8,000 monthly contributions add up to roughly NT3.9 million**.
Path 2: Systematic disciplined execution. The same NT8,000 per month is set up as an automatic deduction. No timing calls. No reacting to up or down markets. Just 20 years of consistent execution. Academic research shows lump-sum investing beats dollar-cost averaging in roughly two-thirds of historical periods, because the market trends upward over time and more time in the market means more compounding.
Using a 9% real annualized return and conservatively subtracting 0.5% in frictions, the NT3.36 million, and the NT5.56 million. Combined, roughly NT$8.92 million.
**The gap between the two paths is NT5.02 million comes entirely from the behavior gap in entry timing. Same asset. Same money. The only difference is whether you fought the instinct that says “it feels like it is going up.”
NT$5.02 million is enough to retire a decade earlier in Taiwan, enough to pay off a full apartment in central Taichung, enough to do everything you have been saying you would do “once I have the money.”
What about the extreme case? During the dot-com bust from 2000, the Nasdaq fell more than 78% peak to trough over roughly two and a half years. According to ICI data, from 1999 into early 2000, net subscriptions into U.S. tech funds hit an all-time high — the moment the most retail investors piled in was precisely when the bubble was largest. Many of those who followed their gut into the market in 1999 waited more than 15 years just to get their principal back.
Meanwhile, investors who started systematic monthly contributions to tech in 1995 and kept executing through the boom and bust ended 2010 with balances far above those who chased in with a lump sum at the 1999 top.
Four Iron Rules and a Four-Step Action Plan: Replace Your Feeling System Today
The way to fight your feelings is not to analyze harder. It is to build a system that does not need you to decide, and hand the decision-making power from your feelings to the mechanism.
Iron Rule 1: Save 6 months of emergency fund first, then invest. Keep this money in a Taiwan savings account or money-market fund at roughly 1.5% to 2% annualized, fully liquid. Without it, you will be forced to sell during drawdowns when you need cash, and market drops and your need for cash tend to show up at the same time.
Iron Rule 2: Cap your monthly investment at 20% of whatever is left after tax from your take-home pay minus all fixed expenses. Above that ratio, you cannot stomach a drawdown. If you feel the urge to throw every last dollar in at once, that is the single biggest red flag you need to watch for, because that impulse almost only shows up after the market has already rallied hard.
Iron Rule 3: Before you enter, answer two questions — is this money something you are 100% sure you will not need in the next five years? And if this money halved tomorrow, could you keep holding and not sell? If either answer is uncertain, you are not ready to enter. Not because the market is bad, but because your financial foundation is not solid enough yet.
Iron Rule 4: Write down your exit conditions before you enter. Not when it feels like the market is about to drop. Now. When will you sell? Write it down. Pin it to your notes app. If you cannot write it down, or if your exit condition is “when it feels wrong,” you do not have a system. You only have emotion. And investors who run on emotion alone get harvested by every market wave.
Four steps you can finish today:
Step 1. Open your bank or brokerage app, pull the entry dates and market levels for every buy you have ever made, line them up against the historical S&P 500 chart, and calculate how close each entry was to the nearest prior local top. That number is more persuasive than any argument.
Step 2. Set up an automated monthly investment plan. Taiwan investors can use the recurring-buy function on their offshore brokerage to schedule automatic monthly purchases of an S&P 500-tracking ETF on a fixed date. Set the amount to the number from Iron Rule 2. Once it is set, lock it away and pretend it does not exist. Let the mechanism execute for you.
Step 3. Write this rule in your phone’s notes app: “When I see friends flashing gains in the group chat, when investment chatter floods my feed, when I feel the market is about to rally, I will not jump in immediately. I will wait for one full month-end settlement and let the automatic deduction mechanism execute for me, with no extra buys.” Screenshot this rule. The next time the feeling hits, open the screenshot first.
Step 4. Set a calendar reminder to do an investing-behavior review every six months, and check two numbers: did you make any unscheduled extra buys or premature sells in the last six months, and where did your actual entries and exits land on the market’s price path? If you find yourself making unscheduled moves driven by feelings, log it honestly. Write down what emotion triggered the decision. You can never fix a problem you cannot see.
Buying because it feels like a rally is the most efficient way retail investors hand their money to the market. Your brain is not a market-analysis tool. It is a machine designed, under the relentless bombardment of social media, financial media, and friend groups, to produce emotional decisions.
The way to fight it is not to analyze harder. It is to build a system that does not need you to decide, and hand the decision-making power from your feelings to the mechanism.
Drop a comment and tell me: when was the last time you bought in because it “felt like a rally”? Roughly where was the market at the time? What was the outcome? I want to hear your real story.
If this article made you see something you have not been willing to face, leave a comment, share it with that friend in your circle who is currently being held hostage by the “it feels like a rally” trap, and subscribe to Cash Power Lab. Every episode, we dig up the financial truths nobody is telling you, one by one.
This article touches on financial and investment topics. Please evaluate based on your own situation and consult a qualified financial advisor.
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