Trump's "crazy" actions trigger market crash: Should we panic or ignore it?

1️⃣ Review of Trump's latest "stunt"
After being snubbed for the Nobel Peace Prize, he exploded in anger and issued a lengthy article attacking China's rare earth policies. He announced a 100% tariff on China (which, combined with existing tariffs, reaches 130%), effective November 1. Market reaction: US stocks fell across the board, with technology and Chinese concept stocks suffering heavy losses. Epic crash in cryptocurrency: BTC -14% (once dropping below $55,000), ETH -16.7%, DOGE -58% (meme coins in a sea of blood).
2️⃣ Trump's "market manipulation script"
Since 2016, Trump's approach has been highly consistent:
Harsh words (tariffs, sanctions, crazy rhetoric) → market panic and sharp decline. A few days later, a change of tone or "clarification" → market rebound. People around are positioning in advance: Trump family's assets increased from 4 billion to 7.3 billion (2024 data), coincidence? After each sharp market fluctuation, there are always those who accurately buy the dip/sell the top.
Typical case:
In the 2018 China-US trade war, Trump made repeated jumps, and the VIX volatility of the US stock market surged, leading to huge profits for hedge funds. Before the 2020 election, the "October Surprise" saw Bitcoin surge 20% in a single day, followed by a 30% crash.
3️⃣ Why does the market always get "duped"?
Algorithmic trading exacerbates the situation: quantitative models are highly sensitive to political news, triggering automatic sell-offs. The media amplifies panic: "Trump's tariffs" = "global economic collapse" is an exaggerated narrative. Retail investors' FOMO sentiment: following the trend to cut losses after a crash, chasing gains after a rebound, repeatedly getting harvested.
Ironically:
The impact of China's rare earths on AI has been exaggerated (see previous analysis), but the market still chooses to believe in the "worst-case scenario." The actual impact of tariffs is limited (China's exports have long been diversified), but funds are fleeing out of caution.
How should ordinary investors respond?
✅ Strategy 1: Ignore the noise and focus on the long term
Trump's statements are 90% political performance rather than economic reality. Example: In 2019, he threatened to "block Apple," yet iPhone sales in China hit a record high.
✅ Strategy 2: Stay Calm and Buy the Dip After a Crash
Historical data shows that the panic triggered by Trump is usually driven by short-term events and is repaired within 1-2 weeks. After each "Trump collapse," BTC and ETH have an average increase of +35% over the next 3 months.
✅ Strategy 3: Hedge Against Political Risks
Holding gold and government bond ETFs to hedge against unexpected black swan events. Avoid high leverage to prevent being "pinned" and facing liquidation.