How To Make Millions In A Market Crash
Watch the video below to learn how to make millions in a stock market crash.
What do you do in a bear market, when the stock market is crashing. Do you sell at the bottom, phone your mother or sit tight?
Peter Lynch explains the volatility of stock markets and what to do during a stock market crash.
The S&P500 tracks the 500 largest stocks on the New York Stock Exchange. It is a bellweather for the US economy. Launched in 1957, the S&P500 has made an annualized return of around 10.5% since its 1957 inception through 2021. This includes riding out the stock market crashes.
Stock Market Crashes
We can learn a lot about investing from studying the history of stock markets.
- In 2000, the Nasdaq lost 39.28% of its value. In 2001, the Nasdaq lost 21.05% of its value
- In 2000, the S&P500 lost 9.15% of its value and 11.86% in 2001
- During the 2008 financial crisis and the Great Recession, the S&P 500 fell 46.13% from October 2007 to March 2009 but recovered all of its losses by March 2013
- In 2020, the coronavirus pandemic sent the world into a recession and equity markets reeling as the S&P 500 plummeted nearly 20%
- The S&P bounced back in the second half of 2020 and reached several all-time highs in 2021
- In 2022, the S&P500 has lost 54.94% from jan 1st, 2022 – 24th June, 2022
The Tech Bubble (2000)
In 2000, the stock market experienced a bubble. This period was marked by overvaluations, excess public enthusiasm for stocks, and speculation in the technology sector. When the bubble burst between 2000 and 2002, the technology-centric NASDAQ took a major hit, while the S&P 500 also took a lesser hit. The S&P 500 recovered, eventually reaching new highs in 2007. This period was fueled by growth in housing, the financial sector stocks, and commodity stocks.
The 2008-09 Financial Crisis and Great Recession
However, many of the previous decade’s gains were reversed after a decline in housing prices. Widespread debt defaults created an environment of intense fear, and distrust of stocks as a trustworthy investment.
The S&P 500 bottomed out in March 2009 during the financial crisis that has come to be known as the Great Recession. The decline was the largest drop in the S&P index since World War II.
The 10-Year Bull Market
By March 2013, the S&P had recovered all of its losses from the financial crisis soaring past the highs from 2007 and the prior highs from the tech bubble of 2000. To put the move in perspective, it took the S&P 500 nearly 12 years to break the tech bubble highs of 2000 and hold onto those gains. However, the rally didn’t end in March 2013 and the S&P continued higher for nearly another seven years.
The index went on a nearly 10-year bull market. A bull market is a rising stock market that doesn’t experience a price correction of 20% or more. Stable economic growth and low-interest rates helped to keep equity prices on the rise during the 10-year run. Some investors typically opt for more stable, income-producing investments, such as bonds that pay a steady interest rate. However, during extended periods of low-interest rates, as was the case following the Great Recession, bond yields become less attractive since yields tend to move in tandem with market interest rates.
As a result, many investors poured their money into the stock market including buying up dividend-paying stocks. Dividends are cash payments made to shareholders by companies as a reward for owning the stock.
Speak to an Adviser
A professional adviser can guide you through the process of investing in discretionary managed funds that can help you build an investment wrapper or set up a retirement portfolio.
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