Let me just reemphasize a core belief of mine: most people should not invest actively!

Today was one of those gut-wrenching days for me that tested my resolve and reminded me of that very belief.

One of my largest positions – Tiger Brokers $TIGR – was down 40% pre-market on yet another round of regulatory crackdowns from China, alongside its peer $FUTU.

So why should most people just stick to indexing? First, I believe there is a temperament problem. I consider myself a fairly rational and emotionally stable investor. I played poker for many years when I was younger, which thoroughly trained me to process financial losses without panicking, and to assess outcomes based on the quality of the underlying decision and not the outcome itself.

Yet, even with that background, I could still feel the heavy "impact" of today's 40% drop.

When a stock plummets like that – and it happens more frequently than you may think ($WIX recently had one of these days too), and you might already feel it after just a 10% drop –, it is incredibly easy to turn off your rational brain and let raw emotion take the wheel. When your emotions start controlling your decision-making, that usually doesn't lead to quality decisions.

Second, tracking businesses takes serious time and specialized skill. Understanding corporate fundamentals, accurately assessing the quantitative impact of breaking news, thinking about the impact in terms of valuation and the embedded expectations in the price, and thinking in shifting probabilities are attributes you have to actively train.

For instance, today, when the news dropped today, one of the first questions that popped up in my mind was "What's the range of possible fines Tiger may be facing and which probability would I assign to each scenario?" (from a fine so large they'd bankrupt the company to a much more moderate fine like the one we learned about later throughout the day)

Later in the day, the regulatory details emerged: Tiger is facing a fine of roughly RMB 308 million plus RMB 103 million in confiscated illegal income (rpughly US$57M). While substantial, it is a far cry from the existential threat the pre-market sell-off implied (in my view at least).

Looking at the initial panic, bankruptcy was absolutely on the menu of market fears (and it wasn't a zero probability scenario to be fair), but the actual numbers are a manageable corporate hit (around 4 months of FY25's net income) rather than a death sentence.

With mainland Chinese assets now representing only about 10% of total assets, there are three open questions I am weighing going forward:

1️⃣ How heavily will this impact Tiger’s brand? Will prospective clients simply opt for a perceived safer haven like Interactive Brokers ($IBKR)? This is a qualitative risk that is easily underestimated. I got this one initially wrong when owning $TISG, for instance, the Mediterranean Sea incident happened.

2️⃣ Is the "China overhang" finally over? With a two-year transition period outlined to wind down existing mainland accounts, is this the final chapter that allows Tiger to finally move forward cleanly with its international growth and user based that is much more diversified geographically than it was in the past, before the company faced the initial waves of regulatory crackdown (2021, 2023, 2025)? This is the bullish interpretation.

3️⃣ Is the perimeter truly drawn, or could Hong Kong residents eventually face similar capital flight restrictions down the road? I'd love to hear opinions on this from people actually living in HK. I realize, under the "One Country, Two Systems" framework, Hong Kong maintains a completely independent monetary system, but with regulatory screws tightened further and further, I guess you cannot be cautious enough.

Active investing isn't just about reading spreadsheets; it's about staying rational when the market drops a bomb on your portfolio. Today was a stark reminder of that for me.