so the stock market will crash it's happened time and time again this is the scary truth however it doesn't have to be a bad thing as long as you're properly prepared you can benefit from the chaos I've been investing for more than 35 years and as you can imagine during that time I've experienced lots of these crashes however I always seem to come out the other side wealthier than before so today I want to share the knowledge that helped me make millions through multiple Market crashes by understanding these strategies you can spot the warning signs
of a crash and use them to your advantage so how common is a market crash well there are three different types of market decline first is the most common type of decline a market correction this is defined as at least a 10% drop from a recent High these can be caused by various factors but think of it as the stock market realizing is getting a bit expensive and cutting back prices on average these have happened around every 1.2 years since 1980 the second most common type of decline is a bare market now you know when
you're in a bare Market when prices have drop more than 20% since 1932 these bare markets have popped up on average every 4 years and 8 months they tend to keep dragging the market down for about 289 days or roughly 9.6 months sure that sounds like a long time but keep in mind that ball markets which is when the market is going up usually last around 965 days or 2.6 years the third type is a stock market collapse which I class as an over 30% drop in the stock market normally within a very short amount
of time although these are very uncommon they can happen in my opinion if Trump had been unived then this could have been a very real scenario that isn't a political view just a logical one due to the way the stock market reacts to this kind of thing the main takeaway from all of this is that if you aren't ready for the stock market to go down sometimes then you shouldn't be investing in stocks so how do you spot a market crash well let's discuss the three phases of a market crash so you'll know what to
look out for I'll also share the strategies I use at each stage backed by real life examples from my experience this way you'll be better prepared than most investors remember I'm not a financial advisor and this isn't financial advice I'm just sharing what's worked for me over the years number one the eor phase this is a stage where the market is at its peak and irrational excitement drives prices to unsustainable levels during this stage everyone is happy and flying high when I start seeing this blind happiness I prepare my investments for when everything comes crashing
back to reality before the 2008 financial crisis there was a couple of things that I noticed that really made me cautious about investing first was the Boom in consumer spending every everyone had money they were spending thousands and the economy was thriving a more recent example of this is the nft craze a couple of years ago never in a million years would I have thought that people would buy jpeg image files for millions of dollars things like this are a clear sign of too much money in circulation the second thing I noticed in 2008 was
the increase in the number of people buying houses or refinancing this is because it was easier than ever to get credit as the housing market was booming which meant if people were unable to pay their mortgages then the banks could take back the properties without losing any money now it's one thing noticing these little Clues but it's another thing actually taking action and preparing yourself between 200 seven and8 I could have just gone along with the crowd as the general herd mentality was that everything was great and nothing would ever go wrong but instead I
started to prepare my investments for the worst at the time lots of my friends and fellow business owners didn't quite understand the decisions I was making they may have even seen me as a bit of a coward but from my perspective I don't think they understood how much risk they were taken so if your Spidey senses start tinkling these are some of the things you can do to prepare yourself for the worst first I would evaluate and minimize your risk level wherever possible personally I'm not focused on chasing crazy high returns as that's unsustainable for
the long term I just want to be making reasonable gains consistently so my money compounds I always think about the story of the toris and the hair I know it might sound boring especially coming from a boomer but slow and steady does win the race if you're new to investing there's a high chance you haven't experienced a real market crash it can be horrifying to see your portfolio completely halfing in value and sitting deep in the red for a brief period of time so you have to ask yourself if you could mentally handle this kind
of drop without selling your investment secondly I would start to reduce my leverage now on one hand Leverage is a great way to accelerate wealth but it can also be very dangerous the thing is if a stock crashed too far then your investing platform May issue a margin call which means you have a limited amount of time to pay off your debts and if you don't your brokerage may sell your stocks at the bottom of the market to recover the money you borrowed if this is something you're considering or even doing then if I were
you I would be paying some of this debt off I never use margin but that's a personal choice and I'm well aware that by not taking on this risk I'm missing out on some potential profits the truth is I've seen too many of my friends go from millionaire status to broke in the blink of an eye and now I just stay well clear of it thirdly I'd start saving some extra cash in a highin savings account I know I bang on about having an emergency fund of 3 to five months of your living EXP expenses
but I'm talking about saving even more I did this between 2007 and 8 from the outside it looked a bit strange the market was booming by leaving my money in the bank I wasn't taking advantage of it however I noticed that more and more people were getting interested in investing which tipped me off that there was a bit of a bubble forming you see when everyone starts getting comfortable with the idea of investing it can be a sign that things are about to pop as pricing is being propped up by inexperienced investors the trouble is
that at the first sign of a crash lots of these people panic sell which drives the prices down even further leading to a spiral of Doom finally in this stage I would make sure my investments were properly spread out this is called diversification and it's one of the best ways to help withstand a market crash as quite simply put you haven't got all your eggs in one basket this is all because you never know what sector is going to be hit the hardest during the good times it can be very common for people to do
very well with one or two stocks and end up with most of their money focused in only a couple of different companies even if they start out with lots of different stocks it can almost seem silly to put your money into other things when one stock outperforms all your others let's use some of my favorite stocks as an example say you have $1,000 to invest now you could put all of that into Tesla with the hopes of it going into the moon but if Tesla gets hit the hardest in the market crash it won't be
great news for your money whereas investing into a total us stock market fund would spread your money across multiple different Industries look nobody can predict if the stock market is going to go up or continue downwards however diversifying goes some way to reducing your risk yes you can't guarantee returns but at least you're investing in a broad range of sectors another great way to diversify while guaranteeing a return on investment is through something called a high yield cash account take a look at this for example let's say you have $5,000 to put by with an
additional $250 being saved monthly within 5 years you'd have earned $3,493 without making a risky investment because the account pays you 5.1% interest that compounds daily public offer this account with zero fees or subscriptions required as well as has given you the ability to invest in thousands of stocks and ETFs with very low fees I was planning on mentioning public anyway so I reached out to them to see if they were interested in sponsoring this video they agreed and are offering a free stock worth up to $300 to anyone that signs up and funds their
account just sign up for public deposit $20 or more and enter the code Mark 2024 via the rewards hub in the public app I'll leave a link in the description if you're interested along with some other options if you're not in the USA number two the Reckoning phase I like to call it this as everyone gets rudely punched in the face with the truth and only the ones that know how to navigate it will be able to hold their nerve and make some money this is the phase where the reality of overvaluation sets in triggering
Widespread Panic and sell-offs what I'm trying to get at is in this phase the stock market just comes tumbling down and it's next to impossible to be unaffected even my son knew something was happening in 2008 and he was only 10 the number of customers that came into my hobby stores hared overnight and even when they did come in they didn't spend anything on the bright side I had lots of products which I owned and my warehouses were full it was sort of a bit like a safety blanket I suppose in 2008 I saw dollar
stores opening up everywhere it was the perfect mixture of demand for cheap goods and supply of products from failing businesses even if you managed to predict all the signs of the crash and in Phase One prepared correctly phase two is really where you get tested it's more about human psychology as most people's initial reaction is to sell their Investments and cut their losses you need to seriously ask yourself what you going to do when the market goes down everyone says their long-term investors until the market crashes it's very easy to be a long-term investor while
everything's going up if you believe in your Investments then you have to hold firm to have this kind of belief you need to know why you invested in something that's why it's so important to understand the fundamentals of a company before investing in their stock this reminds me of a story Peter Lynch once shared he's a well-known investor and back in the day he bought shares in Kaiser Industries when they dropped significantly the company had zero debt making bankruptcy very unlikely he thought to himself how much lower can it go but the price kept dropping
to under $10 he was shocked but held on then the stock eventually rebounded to $50 the point is if you don't understand the company what will you do when the stock keeps dropping probably sell and lose out on potential gains this applies to Index Fund investors as well a study by Fidelity actually found out that if you invested $10,000 in a simple S&P 500 Index Fund between the 1st of January 1980 and the 31st of December 2022 you would have 1 million $82,900 so you might think you're being smart by timing the market but in
the long run you're probably only going to hurt your own profits but if you believe believe in your stocks for the long term there is a lot more to it than just holding firm in 2008 I saw what the dollar stores were doing and instead of seeing a competitor I saw an opportunity if they could buy things for a bargain price then it must mean there were amazing deals available so I went out hunting I went on a bit of a buying spree over the next couple of years and acquired lots of different assets including
stocks and even entire businesses I knew that I would be unable to I'm the exact bottom of the market so I invested every week this is called dollar cost averaging cash is really King if you have cash you can snap up some amazing Investments during this time that's why it's super important to keep a steady income and super charge it with a side hustle during Times Like These as the more assets you can invest in the better you'll probably end up doing in the next phase the bottom line here is that while some choose to
panic sell and lose all their money others choose to Double Down and buy the dip which you've done correctly can make you a fortune I feel like I should also mention that some investors like to short stocks which is basically betting that stock will go down it's not something I personally do however people like Michael bur have been very successful with this strategy if you want to know more about this then let me know in the comments I also recommend The Big Short if you feel like watching an entertaining and informative investing film number three
the Phoenix phase in in this Final Phase the market begins to recover and rebuild rising from the ashes of the crash it usually pushes above and beyond the last Market highs I noticed that four years after the 2008 crisis happened just after the London Olympics things started to improve businesses were hiring and money was a bit easier to come by but even though people started to have cash again the mentality of not spending carried through for a while so it was another 4 years really until everything was back to normal I've experienced a lot of
crashes I'm talking Black Monday the dotom bubble the 2008 financial crisis and the 2020 pandemic one of the key lessons I took from all of this was that a bull market almost always follows a bare market and that the seeds of your fortune are often swn in times of Crisis and uncertainty as long as you're able to handle your level of risk and you're buying into the stock market consistently with a diversified portfolio then you stand a much better chance than most at making some real money if you want me to walk you through exactly
how to start investing in the stock market then I'm going to leave that video right up there but don't click on it just yet make sure to subscribe if you want to grow your wealth okay I'll see you over there
