The Next Stock Market Crash Is Coming – Here’s How To Avoid It

Have you seen headlines like this in the financial press recently?

You don’t have to look far to see claims that the US stock market is in a bubble, along with statements from market experts who ‘predicted’ the 2008 financial crisis and subsequent market falls.

So, who should you believe, where do you turn and most importantly, what do you do with your portfolio? Let us help answer those questions…

Firstly, what is a stock market crash?

“A stock market crash is a rapid and often unanticipated drop in stock prices. A stock market crash can be a side effect of a major catastrophic event, economic crisis, or the collapse of a long-term speculative bubble. Reactionary public panic about a stock market crash can also be a major contributor to it.” – Investopedia

We’ve seen how events that impact the world, such as the 2008 financial crisis and in 2020, the rapid spread of Coronavirus, can cause some of the quickest stock market falls ever seen.

But it’s interesting to note how public panic can contribute significantly. You’d think for this reason the financial services industry would be putting out messages about staying calm and showing evidence to help people understand what it all means.

We’re sad but not shocked to report (once again) that’s not the case.

Where should you turn for trusted financial advice?

So, if you can’t turn to the media or some of the large financial services firm in the UK, who and what do you trust?

There’s one simple answer, the evidence.

If a crash is coming, it isn’t going to be first and it certainly won’t be the last. So why not turn to past events to help inform you about what a crash might look and feel like the next time it happens?

Let’s use the most recent one as an example.

The global stock market fell by about 25% in March of last year but rose above it’s starting point by the time Christmas rolled around – despite the ongoing pandemic and third lockdown looming!

And, despite huge events such as the 2008 financial crisis, Brexit, the political upheaval in the US and so much more, as you’ll see below, equity markets have recovered time and time again.

Source: World stock market performance, MSCI World index

But the fact is, periods of market volatility are really very common.

What should you do?

Ultimately you can’t ‘avoid’ a stock market crash. But you can trust the evidence and a long-term approach to investing, that is set up to serve your personal needs. Learn more about that here.

Trusting the evidence means having faith in markets, patience and discipline.

And most definitely avoiding the click bait headlines!

Get in touch with us if you any concerns over stock market movement or your existing set up.

Past performance can’t guarantee what investments will do in the future. The value of a portfolio can go down as well as up, so there’s a chance you’d get back less than you put in.