2020 COVID Stock Market Crash: A Storm of Panic and a Surge of Opportunity
Feb 21, 2025
⚡ This Wasn’t Just a Crash. It Was a Mass Psychological Break.
The 2020 COVID crash wasn’t merely a financial event. It was a collective nervous breakdown dressed in red candles. Markets didn’t fall—they convulsed. Algorithms panicked. Humans froze. Everyone thought the system was ending. And in that void of rationality, opportunity screamed.
This isn’t a postmortem. It is a decoding of crowd behavior under pressure. When the world loses its bearings, markets speak the raw language of fear. But the brave don’t just survive it; they exploit it.
🧠 High V-Readings Don’t Just Signal Volatility—They Reveal Emotional Extremes
Let’s talk V-readings—not in the sterile language of quant models but as the pulse rate of market consciousness.
High V doesn’t just mean chaos. It means opportunity is being mispriced in real time.
You saw it: 1000-point mood swings in the Dow became routine. That’s not noise. That’s emotional liquidity—fear-driven sellers versus high-conviction contrarians quietly accumulating.
The Dow’s 3600-point rocket in three days? Not a fluke. That happens when panic sellers run out of steam, and smart money steps in.
Expect more of it. 3000-point single-day swings aren’t insane—they’re symptoms of a wounded but recovering psyche.
And right now?
V is high.
The trend is up.
Fear is still leaking from the edges.
That’s your setup.
🚛 “Back Up the Truck” Isn’t a Cliché—It’s a Tactical Command
The “mother of all buy signals” didn’t show up wearing a suit. It came wrapped in blood-red headlines, doomsday predictions, and empty grocery shelves.
Perfect.
When insiders start buying during a crisis, they’re not guessing. They’re front-running recovery. The data confirms it: insider activity surged. That’s not hope. That’s informed conviction.
So yeah—back up the truck. Not blindly. Not recklessly.
But with a surgical focus on value, asymmetry, and emotional distortion.
Three Weeks We noted that Insiders were backing the Truck Up.
Those with privileged information have taken advantage of this significant market decline to acquire shares. One method of gauging the intensity of their purchasing is by examining the sell-to-buy ratio. A reading of 2.00 is considered normal, while anything below 0.90 is considered exceptionally optimistic. The ratio is astonishingly low, 0.35, indicating that these individuals are aggressively buying shares.
So, what are the current readings? Based on substantial trading activity, Vickers’ standard NYSE/ASE One-Week Sell/Buy Ratio is 0.33, and the overall one-week reading is 0.35. Insiders aren’t simply buying shares; they are voraciously acquiring them. This behaviour mirrors what occurred in late December 2018, following the stock market crash on Christmas Eve, in early 2016 during a market correction, and in late 2008/early 2009 amidst the depths of the Great Recession. Those periods presented outstanding opportunities to purchase stocks. Insiders appear to be suggesting that today offers a similar prospect..
Insider Buys: These Chaps are Still Buying Hand Over Fist
Corporate executives and officers have been adding shares of their firms over the past few weeks at breakneck speed, so much so that they’re more bullish than they’ve been at most other points in the past decade, according to Sundial Capital Research.
During this period, which admittedly took place during a significant bull market, instances of peak insider buying have proven to be a positive indicator for stocks. The S&P 500 experienced a median increase of 20% over the following year. From 1997, the benchmark recorded a gain of 12.6% in the 12 months following robust insider purchases. Jason Goepfert, the president of Sundial, a research firm based in Blaine, Minnesota, noted sufficient evidence to view insider positions as a positive signal. However, it should not be assumed to be a strong buy signal, as trends have been less favourable in the past decade.”
The trend is clear, and the insiders know this; otherwise, they would not purchase shares aggressively.
Perfect. Here’s a layered continuation of your piece, now loaded with behavioural dynamics, historical echoes, and off-grid contrarian psychology:
🧠 Behavioural Breakdowns: What the 2020 Crash Really Exposed
Loss Aversion wasn’t just present—it ruled. Investors weren’t trying to make money; they were trying not to feel loss. That’s different. It’s visceral. Neuroscience shows loss activates the same parts of the brain as physical pain. So when portfolios bled red, logic left the room. Survival mode took over.
Recency Bias kicked in like a drug. March 2020 headlines said “unprecedented,” and the brain agreed. Investors couldn’t remember 2008, let alone 1987. All that existed was the now—and in the now, the world was ending. But it wasn’t. It never is.
Crowd Mimicry turned investing into synchronised panic. Selling became contagious. One hedge fund dumps, ten follow. Retail panics, Twitter echoes it, CNBC packages it, and suddenly fear becomes “the smart move.” But it’s not smart. It’s viral.
This wasn’t price discovery. It was emotion discovery.
🔄 1987 vs. 2020: Different Virus, Same Mind
The 1987 crash—Black Monday—was sparked by programmatic trading and a panic snowball. It fell 22% in a single day.
No virus. No lockdowns.
Just feedback loops and human fragility under stress.
2020? More drawn out. More global. But the emotional structure? Identical.
In both cases:
- Panic selling drove prices far below intrinsic value.
- Contrarians got laughed at… before they got rich.
- The rebound came faster than anyone expected.
In ‘87, Buffett went bargain hunting while the media declared capitalism broken.
In 2020? Same playbook. He bought the dip in Japanese trading houses while retail investors were binge-buying Clorox and canned beans.
Different backdrop. Same mistake.
💡 Real-Time Contrarian Plays That Defied the Herd
- Airlines & Energy:
While the masses screamed “never flying again,” contrarians looked at the history of pandemics. Nothing lasts forever. Airlines like Delta and energy giants like Exxon were priced for extinction. So a few bold buyers stepped in. 12 months later? 80–100% returns. - REITS & Commercial Real Estate:
Zoom was the new religion. Office buildings were “dead.” Except… not really. Smart investors bought into REITs like SL Green and Realty Income when they were trading at 40–50% discounts to book. They bet on normalcy before it was cool. - Value over Growth:
Everyone chased tech. But the smart money pivoted early into industrials, cyclicals, and mid-cap value—precisely when nobody wanted them.
In short: the contrarian didn’t just bet against the crowd. They bet against emotional trauma—and won.
🧬 Market Crashes Are Recurring Psychological Algorithms
You can call them events, but crashes are more like recurring code. The syntax is familiar:
- Shock → Panic → Capitulation → Opportunity → Regret
- Lather, rinse, repeat
It’s a Generational Groundhog Day.
Boomers did it in 1987.
Gen X got sucker-punched in 2000.
Millennials ate it in 2008.
Gen Z? Froze in 2020.
They all said they’d buy next time.
They all froze when it came.
Volatility doesn’t cause the paralysis.
The mirror does.
🧨 Crisis Is the Great Market Filter
Every few years, the market shakes the tree. The weak fall off. The strong climb higher. But it’s not strength in charts—it’s strength in mindset.
Survivors of 2020 weren’t just good stock pickers. They were psychologically antifragile. They welcomed chaos.
They understood one brutal truth:
Fear creates mispricing. Mispricing creates wealth.
But only if you can stand in the fire without flinching.
Case Study: Warren Buffett’s Apple Investment
During the market panic, Warren Buffett’s Berkshire Hathaway increased its stake in Apple, demonstrating a contrarian approach that capitalised on the market’s cognitive biases. This move proved highly profitable as Apple’s stock rebounded strongly in the following months.
⚔️ When the Herd Freezes, You Load
Volatility is not the enemy. It’s the test.
It’s not just a pricing event—it’s a character reveal.
When the VIX spikes and the headlines scream, remember:
- The crowd will freeze.
- The pundits will preach caution.
- The money will shift hands—from the emotional to the prepared.
The only question is:
Which side are you on?
The Volatility Paradox: Weaponising Chaos
The 2020 COVID crash wasn’t just a collapse but a mispricing festival for those who didn’t flinch. While most ran from volatility, a few turned toward it and found gold in the fire. That’s the paradox: volatility scares the herd, but it rewards the prepared.
How the Bold Played the Storm
- Volatility-Based Allocation
Those who adjusted exposure based on volatility readings—not price—minimised drawdowns and reloaded near the bottom. This wasn’t a prediction. It was adaptability. - Options Tactics
With the VIX above 80, options weren’t just risk hedges—they were weapons. Long straddles and volatility arbitrage strategies exploded in value while stocks melted down. - Sector Rotation
Volatility didn’t hit all sectors equally. While travel and hospitality bled, digital infrastructure and remote work plays like Zoom, DocuSign, and Nvidia surged. Rotation wasn’t optional—it was survival.
Case in Point: Volatility ETFS
Traders who nailed timing with products like UVXY walked away with 500%+ returns. But blink, and it was gone. These weren’t buy-and-hold plays—they were precision strikes. No safety nets. Just volatility surfing.
Lesson? Volatility rewards skill—not hope.
Closing Fire: Chaos Sorts the Pretenders From the Players
The 2020 crash was less about fundamentals and more about emotional mechanics. High VIX readings weren’t red flags—they were contrarian signals. Insider buy-sell ratios flipped hard, signalling that those with the best info were getting greedy while the crowd panicked.
Let’s anchor this:
- High volatility often precedes major moves. Ignore the fear—it’s a smokescreen.
- Insider buying spiked as retail fled. That’s not a coincidence. It’s insight.
- Cognitive distortions like herd mimicry, recency bias, and loss aversion weren’t bugs in the system—they were the system.
- The so-called “Volatility Paradox” isn’t a paradox—it’s a cheat code. Chaos is the signal, not the noise.
- Follow the money, not the headlines. Insiders buying when volatility peaks? That’s not guesswork. That’s conviction.
Final Word: Volatility Is the Test, Not the Enemy
The crash of 2020 proved again: markets don’t just move on data—they move on emotion misfired under stress. For the psychologically armed, that’s the moment of power.
Because every panic is a portal.
Every selloff is a setup.
And every volatility spike is a doorway most won’t walk through.
But if you do?
You don’t just survive the storm—you own the calm that follows.
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