Have you noticed in the last three months that the friend who never watches the markets has started asking you “which one should I buy now”? Have you noticed that when you go to a convenience store for lunch you can overhear two office workers at the next table chatting about “this time it’s really different, AI is the trend, if you don’t buy now you’ll miss out”? Have you noticed nobody in your chat groups is talking about risk anymore—everyone is showing off their statements? Even someone who’s only made 5% or 10% feels like a stock god.
If you’ve had this feeling, listen up—what I’m about to say today may make you very uncomfortable, may even make you want to swipe away. But if you can endure these 10 minutes, you may figure out what to do with that investment portfolio you’re holding right now, the one that makes you a little nervous but too reluctant to sell.
Most people think the market is most dangerous when everyone is panicking, when newspaper headlines are all black, when TV experts are arguing. Wrong. The most dangerous moment for the market is precisely right now—when you feel there’s no reason to panic. Because what your eyes see is TAIEX at 43,500 and U.S. stocks repeatedly making new highs, but what your heart doesn’t see are three things. These three things, 90% of retail investors still don’t understand, and sorry to say, the layer that does understand is already preparing.
You might say: “Here we go again—every time it goes up someone shouts crash.” You’re right. I’m not here to call a crash today; nobody can precisely predict the top. But what I want to tell you today is that what you most need to do right now is neither go all-in nor go all-out; it’s to first understand these three warning signs. Because these three signs aren’t some hindsight-justified nonsense indicators—they’re real signals happening right now, right in front of your eyes.
Warning Sign #1: Herd Mentality—The Moment Your Office Starts Talking About Stocks
Most people think making money is about catching the biggest move of the cycle. Most people think if you miss this wave, you’re done for life. Most people think this time is really different. But what truly affects your wealth ten years from now has never been how much you made on any single bet—it’s how much you bet at the time you should have been the most cautious.
Let me tell you a brutal fact. TAIEX went from 10,000 to 20,000, from 20,000 to 30,000, from 30,000 to 43,500—every time it hit a new high, someone shouted it was going to crash. And what happened? It kept going up. So you start regretting, start getting anxious, start breaking your time deposits, moving out your emergency fund, even taking out a personal loan to open margin. You tell yourself: “I’ve got to get on this one this time.”
Then what? Then history has repeated itself three times: the 2000 dot-com bubble, the 2008 financial tsunami, the 2022 correction. Every single time it was the same script—the last leg of a major bull market runs up the fastest, is the most seductive, and is the hardest for retail investors to resist, but it is precisely this leg that buries the most people.
Why? Because recency bias is at work. Your brain sees the last three months all going up and automatically assumes the next stretch will too. It’s not stupidity—it’s instinct. But the market counts on your instincts to harvest you. When two convenience-store office workers are chatting about “if you don’t buy now, you’ll miss out,” when your friend who never watches markets starts asking you for picks, when nobody in the chat groups is talking about risk—congratulations, herd mentality has reached its peak. This is the first crash warning sign.
Warning Sign #2: Margin Balance Explosion—Borrowed Money Is the Most Dangerous
If the first warning sign is emotion, the second is numbers—margin balance.
What is margin? It’s when you borrow money from your broker to buy stocks. When the market is good, retail investors love margin because it lets you do NT1 million of capital—double the gains, exhilarating. But margin has one fatal characteristic: it can be forcibly liquidated. When the stock drops to a certain level, the broker will simply sell your shares; if the proceeds aren’t enough, you owe them. This is called a “margin call.”
When margin balances hit a record high, when the amount retail investors have borrowed to buy stocks reaches an all-time peak, this is the second crash warning sign. Because chips bought on margin are unstable—a modest 5% or 10% pullback will trigger margin calls, panic selling, and chain-reaction declines.
Before every historical crash, margin balance first climbed to a record high. Money borrowed earns luck; money borrowed loses lives. When you see news headlines like “margin balance hits new high” or “retail investors pile in with leverage,” treat it as the second signal and remember it.
Warning Sign #3: VIX Fear Index Diverges from Defensive Assets
The third warning sign is the most subtle, but also the most powerful—the divergence between the VIX fear index and defensive assets.
VIX measures the market’s expected volatility over the next 30 days, commonly called the “fear index.” The lower VIX, the more complacent and safe the market feels. When VIX suddenly spikes from a low, it usually means the big players are already buying insurance (buying VIX ETFs or put options)—they’re talking bullish but hedging with their money.
Even more noteworthy is another signal: gold, silver, VIX ETFs—these defensive assets start quietly rising. When stocks hit new highs and gold hits new highs at the same time, this is the so-called “double-new-high” phenomenon. On the surface, gold rising reflects rising safe-haven demand, but retail investors don’t buy gold—gold buyers are institutions, professional firms, the smart money that sees risk.
When you see stocks, gold, and VIX exhibit “synchronized anomalies,” it means there’s deep disagreement inside the market: retail investors are in euphoria, institutions are on guard. This is the third crash warning sign.
Conclusion: Investors Who See the Signs Will Survive the Crash
I must emphasize again—I’m not here to call a crash today; nobody can precisely predict the top. What I want to tell you today is that when these three warning signs appear simultaneously, what you’re doing right now isn’t called investing—it’s called gambling.
Warning Sign #1: Herd mentality at its peak. Office, group chats, convenience stores—everywhere people are talking stocks, nobody’s discussing risk.
Warning Sign #2: Margin balance explosion. Retail borrowing to buy stocks hits an all-time high, the chips are extremely unstable.
Warning Sign #3: Defensive asset anomaly. VIX spikes from a low, gold rises in tandem, institutions are already buying insurance.
When these three signals light up together, what you should do most right now is neither go all-in nor go all-out—trim positions down to the level where you can still sleep at night. Pay off your margin, return the borrowed money, trim any position larger than 5 years’ living expenses. Hold onto cash, and you hold onto your future.
History has already repeated three times. Will there be a fourth? I don’t know. But you don’t need to know—you only need to repair your boat before it comes, lower your position to a safe waterline, keep cash within reach. Retail investors who survive every crash will have a chance to truly make money in the next bull cycle.
Disclaimer: The market signals, margin balance, VIX and other indicators discussed in this article are general market observations and risk education, not specific investment advice. All investments carry risk; past performance does not guarantee future results. Readers should make independent judgments based on their own risk tolerance and financial situation, and consult a qualified investment advisor when necessary. This article does not constitute any buy or sell recommendation, nor does it predict the movement of any index or sector.
Tags
TAIEX 43500, 美股創新高, 散戶滿倉, Margin Call, 近期偏誤, Crash Warning Signs, 從眾效應, Investment Discipline, Cash Position, 散戶生存
Comments