BiQ: Recap for the Week Ending March 28, 2025 (Premium)
Welcome to the BiQ Weekly Recap #10!
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There's no way to sugarcoat it. It was a challenging week for the XBI. The index opened on Monday, trading at 87.87 on a somewhat positive note, but it started sliding on Tuesday and continued to slip throughout the rest of the week, closing Friday at 84.40. It reached an intra-week high of 88.95 and a low of 83.97.
Zooming out to the one-month chart, we can see the index closed right around the recent support level of 84-ish.
Zooming further out to the one-year chart, we can see that the index remains in a general downtrend since November. However, it's good to see that the recent support level near 84 appears to be holding–for now.
Understandably, a four-month-long downtrend can generate a lot of negative sentiment, and sentiment can be a powerful force. I don't know if we're at the bottom, and if not, I don't know where the bottom may be. We probably won't know where the bottom is until we're well on the other side.
What I do know, however, is that nothing lasts forever, even if it might sometimes seem that way. The key is to be responsive to what's happening rather than reactive. We can't control market conditions, but we can control how we respond to them.
Optimism might be the opposite of pessimism, but unjustified optimism—the type that leads to euphoric "dip-buying" in an attempt to recoup losses—isn't necessarily the best response to pessimistic market conditions. A better response, in my opinion, is to focus on the long term and be prepared for what to do when sentiment turns around–and it will.
For me, this means exiting positions where I believe the valuation might be stretched (or where I have lost confidence in the long-term thesis), building dry-powder reserves, practicing careful risk management, and being cautious and thoughtful about adding to my positions. The most important thing I try to do is to be prepared for different scenarios, do my research, remain patient where I have high confidence, and–most importantly–not let myself fall victim to euphoria, hope & enthusiasm, anxiety, fear, or persistent negativity.
In short, I know things are tough, but they'll get better. In the meantime, step thoughtfully, manage your risk, and steady on.