Why We Rush to Buy a 50% Discounted Shirt but Panic Sell Stocks at a 5% Drop: Insights from Dragon Capital

The VN-Index is currently undergoing a prolonged correction phase following a robust rally from Q2 to Q3 2025. Coupled with foreign investors’ net selling of thousands of billions of dong, market sentiment has turned cautious.

However, according to Dragon Capital, historical data shows that such periods are not uncommon. During significant downturns like March 2020 and May 2022, the market rebounded strongly, even setting new highs.

From another perspective, during the “double-nine” day on 9/9/2025, Vietnamese consumers spent over 12 million hours hunting for deals on Shopee Live and Shopee Video, generating 1.7 billion views and saving more than 2 trillion dong. Interestingly, while many eagerly “hunt for deals” on discounted goods, they panic-sell stocks during market corrections. Could applying a “bargain-hunting” mindset to stock investing yield different results?

From a behavioral psychology standpoint, the question arises: Why do we eagerly chase a 50% discount on a shirt but panic-sell stocks when they drop by 5%? The answer lies in Daniel Kahneman and Amos Tversky’s “Prospect Theory,” which earned Kahneman the 2002 Nobel Prize in Economics. This theory posits that people’s decisions are often driven by emotions and subjective perceptions rather than pure rationality. The pain of loss is twice as powerful as the joy of gain, leading to “loss aversion.”

In shopping, discounts are seen as clear opportunities, fueling excitement for bargain-hunting. In contrast, market downturns trigger abstract financial losses, activating brain regions associated with physical pain (Human Brain Mapping, 2022). This survival response pushes investors into a “fight or flight” mode, leading to panic-selling to escape short-term pain.

Over the past five years (2020–2025), Vietnam’s stock market has experienced numerous “sale-off” periods due to global and local economic, political, health, and policy events.

Notably, after sharp declines, the market has always recovered, albeit at varying speeds. Similarly, the DCDS fund—the market’s oldest equity fund—has demonstrated impressive resilience and outperformed the VN-Index. In the first nine months of 2025, the VN-Index surpassed all historical peaks from the previous four years, and DCDS reached new price levels.

Regarding investment prospects, Dragon Capital believes Vietnam’s market is poised for continued positive growth in 2025–2026.

First, corporate earnings continue to exceed expectations. Profits of 80 companies tracked by Dragon Capital rose 22.4% in the first nine months, surpassing initial forecasts. Full-year 2025 growth is projected at 21.3%, with 16.2% expected in 2026.

Second, market valuations are attractive, with a 2025 forward P/E of 12.5–13x and 11x for 2026—lower than many regional markets, despite robust earnings growth.

Lastly, Vietnam’s upgrade from frontier to emerging market status will unlock significant re-rating opportunities, as large-scale international capital inflows could fuel a new growth cycle.