After falling below the 1,700-point mark at the start of the week, the VN-Index rebounded sharply by nearly 47 points on October 21, followed by a further gain of almost 22 points in the next session. On October 23 (last Friday), the benchmark added another 13.52 points to close at 1,774.15, ending the trading week up 4% and snapping a four-week losing streak.

However, the index’s advance masked significant divergence across the market. In the October 22 session, shares of VIC and VHM contributed more than 18 points to the VN-Index’s gain of nearly 22 points, while declining stocks outnumbered gainers.

On October 23, buying interest strengthened in the banking sector, driving sharp gains in stocks including STB, ACB and LPB. Trading value on the Ho Chi Minh Stock Exchange (HoSE) reached over VND16.94 trillion ($655.66 million), up about 11% from the previous session. Even so, the market recorded 156 decliners, slightly more than the 144 advancers.

The moves show that a rising benchmark does not necessarily reflect the performance of individual investors’ portfolios.

When emotions drive trading decisions

Vietnam’s stock market has recently seen a series of abrupt swings that have caught retail investors off guard, leaving uncertainty widespread.

Quoc Thang, a resident of Tan Binh ward in Ho Chi Minh City who describes himself as a veteran of the financial sector with nearly a decade of watching stock prices, said the best course of action at present was to “turn off the trading screen, eat some cake, and drink tea.”

Meanwhile, Thao Ngan, who lives in An Lac ward in Ho Chi Minh City and has a substantial amount of spare cash, said she had decided to stay out of the market for now.

“I have plenty of options and have decided to hold cash rather than try to catch the bottom in stocks, even though I have already invested several hundred million dong (VND100 million = $3,870) in the market. I don’t think this is the right time, and I have several other things that require money,” Thao Ngan told The Investor.

Vo Diep Thanh Thoai, head of the high-net-worth customer department at DNSE Securities, said sentiment among many retail investors had deteriorated. One notable feature of the current market was that “the index is in the green, but investors’ accounts are still in the red.”

"When gains areconcentrated in a handful of large-cap stocks, many investors do not fully benefit from the VN-Index’s recovery," he added.

Speaking to The Investor, Thoai likened the past week’s market movements to a roller-coaster ride, with sharp declines repeatedly followed by rapid rebounds.

“Those who cut their losses near market lows may regret their decisions and rush to buy back as prices rise. Meanwhile, investors holding loss-making stocks may become impatient and sell them to switch into stocks that are surging. In both cases, there is a risk of making decisions driven by emotions rather than an investment plan,” he said.

Bui Truc Quynh, head of financial advisory at VPS Securities, said investors could allow emotions to override reason even when they had already developed an investment plan. Constantly monitoring price screens could fuel excitement and prompt investors to chase stocks after sharp rallies.

Conversely, when the market falls steeply, fear of losses can lead investors to sell hastily, disregarding their initial assessments of a company’s prospects.

A particularly common pattern is that investors tend to take profits quickly when stocks rise, while remaining patient in holding investments that are losing money.

Winning the battle against yourself before beating the market

Despite the market’s recent volatility, Thoai of DNSE said the overall picture was not entirely negative.

Cuts in deposit interest rates by some banks could encourage money to seek opportunities in other investment channels, he said. However, the extent to which funds shift into equities will depend on investors’ risk appetite and return expectations.

In addition, valuations for many companies remain relatively attractive. Data published by brokerage VNDIRECT in early October showed that the VN-Index’s trailing 12-month price-to-earnings (P/E) ratio stood at around 12 times.

Excluding Vingroup stocks, the ratio fell to about 10 times. This suggests that opportunities may lie in individual companies rather than in the benchmark’s headline level alone.

Nevertheless, Thoại cautioned that net foreign buying over the October 21-22 sessions was only an initial signal following an extended period of net selling and was not sufficient to establish that foreign capital flows had entered a sustained reversal.

Investors should focus not on trying to predict precisely whether the market will rise or fall, but on preparing a response for different scenarios, he said.

For example, when the index rebounds strongly but buying interest has yet to spread broadly across the market, chasing rising stocks could expose investors to losses if prices reverse. Conversely, a market recovery can provide an opportunity to review portfolios, reassess corporate prospects, and adjust positions that are no longer appropriate.

Thoai also recommended limiting excessive leverage during periods of heightened volatility. Capital should be deployed in stages, guided by predefined scenarios and risk-management principles.

He also suggested that investors keep an investment journal recording the reasons for each purchase and sale, along with their emotional state when making the decision. Reviewing these records over time can help investors identify the circumstances in which greed or fear tends to influence their behaviour.

From a longer-term perspective, Le Le Hang, chief executive officer of Saigon Capital, said investment decisions should begin with financial goals rather than focus solely on expected returns.

Savings intended for a home purchase, a child’s education or retirement will involve different time horizons and levels of risk tolerance. Understanding the purpose of the money can give investors a clearer basis for deciding when to hold their positions and when to adjust their portfolios.

Ultimately, the stock market tests not only investors’ ability to select companies but also their patience and how they deal with their own decisions.

There will always be stocks that rise after they are sold, just as some investments will fall soon after they are bought. No one can get every trade right.

“Investors need to beat themselves before they can beat the market. There are always opportunities in the market, but each investor has only one account. You don’t need to predict every market swing correctly. You just need a plan, discipline and enough time in the market,” Thoai said.