Editorial: How to Navigate a Market Crash

Thomas Monteiro

Mon, Apr 7, 2025, 3:05 AM 6 min read

Investing.com -- Investors person each crushed to beryllium losing their slumber implicit the caller marketplace events. Since the S&P 500 began trading arsenic an scale of 500 companies connected March 4, 1957, determination person been lone 4 different instances—besides the astir caller 2 trading days—where it experienced a nonaccomplishment of 10% oregon much implicit 2 consecutive days. Specifically:

• Black Monday Crash (October 16-19, 1987): -25.65%

• Global Financial Crisis 1 (November 5-6, 2008): -10.30%

• Global Financial Crisis 2 (November 19-20, 2008): -12.83%

• COVID clang (March 11-12, 2020): -14.40%

• Liberation Day (April 3-4, 2025): -10.53%

It's nary coincidence that the Fear and Greed Index has plummeted to its lowest constituent since the COVID-19 clang of 2020, a level antecedently reached lone during the Global Financial Crisis.

Source: CNN Fear and Greed Index

Those who person experienced specified marketplace crashes earlier cognize it: each time, it feels arsenic if the satellite arsenic we cognize it mightiness beryllium connected the brink of ending.

But here’s the bully quality - it ne'er does, and the US economy, on with the banal market, has ever withstood these pressures successful the agelong run.

It’s nary coincidence that Warren Buffett had its largest currency heap ever anterior to this clang oregon that Jamie Dimon sold $230 cardinal successful shares successful February this year. Some mightiness accidental they were waiting for a infinitesimal similar this with unfastened arms.

But why?

Using our humanities information from Investing.com, we calculated the S&P 500 show astatine antithetic intervals (from the adjacent time done 1 year) pursuing the 4 erstwhile instances erstwhile the scale fell much than 10% implicit 2 consecutive trading days.

The results are wide affirmative crossed the board. This means that those who had the courageousness (and cash) to bargain stocks aft a dip similar this had affirmative returns each clip successful history.

Check them retired below:

Source: Investing.com

Could this clip beryllium different? Yes, for sure, it could. However, arsenic seen above, the likelihood (particularly connected the one-year clip frame) are surely tilted successful favour of those consenting to instrumentality vantage of the little banal prices.

While humanities information is wide connected the advantages of buying erstwhile everyone is moving for the hills (be greedy erstwhile others are fearful), it’s not similar buying immoderate banal astatine this constituent volition output you monolithic returns.

Savvy investors would cognize that marketplace crashes oftentimes people the extremity of cycles, yet leaving losers successful the past. Such was the lawsuit for names specified arsenic Cisco (NASDAQ:CSCO), which hasn’t yet recovered its marketplace headdress mislaid successful the dot-com bubble much than 25 years ago.