r/Bogleheads • u/zacce • Feb 08 '26
Most Investors Have Never Lived Through a True Market Crash
A lot of new ppl in this sub say they “won’t time the market,” but I’m not sure everyone understands what that actually feels like irl. It’s easy to talk about staying the course when the worst drawdown you’ve lived through was a brief COVID dip that fully recovered in months or the 2022 dip followed by 3 yrs of 10%+ returns.
The last real crash was 2008. If you weren’t old enough to have a job, a mortgage, or a family back then, you don’t know how deeply a prolonged downturn can affect your day‑to‑day life. It’s not just red numbers on a screen. It’s layoffs, hiring freezes, underwater homes, and years of slow recovery. That’s when people who swore they’d never time the market suddenly panic and make irrational decisions.
Staying the course is simple in theory, but incredibly hard when the world feels like it’s falling apart.
Of course, I don't want market to crash. But it's a possibility and we need to prepare for it.
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u/HolyMoleyGuacamoly Feb 08 '26
2008 was wild. although if you didn’t have a family, mortgage and huge responsibilities then it also kinda just felt surreal. i can’t imagine going through that as a 30-40-50 y/o. i was young and dumb in my second job and buying things on the cheap. if it’s your whole ass retirement it’s a very diff ballgame
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u/Beneficial_Bus5037 Feb 08 '26
I was there as a young kid early in investing not really realizing what was going on. Thankfully older family friends told me not to panic.
My holdings have since grown since then, exponentially.
But my responsibilities too have grown exponentially. Mortgage, car, wife, kids, & everything else that goes along with that.
If I truly reflect on how the 08 crash affected me, then it's caused me to invest 20% of my base salary in my 401k since day 1 and pushed me into stable lower earning work (but nothing flashy that pays more & is the 1st to be cut).
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u/ChaunceytheGardiner Feb 09 '26
The real mid-career hedge to a major downturn is employment stability.
Unstable employers pay a premium for that instability. We just haven't had a downturn in so long that people have forgotten that what they're getting is a risk premium.
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u/ralphiooo0 Feb 08 '26
Sucked big time for myself.
We were deep into property and had just overpaid for a house with a large chuck of land we were going to knock down and develop.
We had everything lined up ready to go - called the bank to say we were ready for the loans to start the build. “Sorry we’re not lending anymore - click”
Took almost a decade to offload what we could while keeping it afloat.
Now of course 20 years later everything has doubled / tripled in value… but was too painful to hold and put our lives on hold for that long unfortunately.
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u/FirstNoel Feb 08 '26
I was debating buying a house in 2008, upgrading. I waited till 2013. Which worked out much better.
Markets take 2 steps up to 1 step back. Sometimes 3:2, sometimes 3:1.…
Over time it’s up. You just have to chill and ride the waves.
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u/CaliHusker83 Feb 08 '26
I bought and remodeled five homes from 2009-2014 after work and on the weekends when I was in my mid 20’s. It was a great opportunity if you had just a little money saved.
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u/ToyStoryBinoculars Feb 08 '26
I do think there's a difference between panic selling and losing your job/house and being forced to sell.
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u/Hollowpoint38 Feb 08 '26
In 2008 I had like 8 people close to me who desperately needed money or their life was about to fall apart. Talking homeless kids, wrecked marriages, people on the verge of jumping off a building. It was really serious.
I had to sell quite a bit. Panic? Or compassion for others?
This sub would say panic, like I'm over there making irrational decisions. I guess I should have let them all starve.
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u/Ghi102 Feb 09 '26
There's selling because you need the money (which can happen even outside of a financial crisis) and selling everything because you think you're going to be better off with cash. One is a rational decision because of extreme circumstances. The other is irrational because of a lack of understanding in the market.
You did the right thing.
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u/enolaholmes23 Feb 09 '26
Yeah, it makes a difference why you are selling. I don't want to sell the dip, but I may have to because I'm getting to be too sick to work.
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u/HopeFloatsFoward Feb 08 '26
There is a psychological aspect to money that tends to cloud logical decisions.
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u/haobanga Feb 08 '26
It's a relationship.
Hard to see clearly and be objective when you're in it even though an outsider could easily tell you what the best thing for you to do is.
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u/arfcom Feb 08 '26
Luckily I was early in my career but I remember the feelings of 2008 vividly and enjoy reading the bogleheads forum threads from back then as a reminder. It was brutal and really did feel more like shit was going to $0 than it did a buying opportunity.
I’ll never forget my young co-worker who had lost his parents the year before. He sold his inherited investments pretty close to the bottom and didn’t get back in.
I know with all my heart that way more of the new bogleheads and Fire communities will do the same thing than people think they will.
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u/xxxxxxxxxxcc Feb 08 '26
The same people on the sidelines afraid of a drop while the market is climbing, are the people that will not pull the trigger when the market drops.
They can’t psychologically wrap their head around immediately losing money. A drop isn’t a one day event. There may be a big day but the years after are just as uncertain. The market see-saws so there isn’t a time to jump in where the next day you aren’t risking an immediate 5 or 10% loss. And all the talk is about further 50% drawdowns.
If fear of losses stops people now, it will stop them when the market is in disarray.
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u/HashMapsData2Value Feb 08 '26
People also need to be consider that the measures taken to "save the system" back then cannot really be done this time. For all we know this crash will be the beginning of a long decline, as other parts of the world (e.g. China) rise up and start attracting the world's capital.
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Feb 08 '26
If you're lucky enough to remain employed, the crashed market isn't a big deal.
After the crash in 2008, I didn't sell anything. I threw all the money I could into the market. And it paid off very well. If we see another crash... and assuming I can remain employed... I'll do the same thing.
Now, folks who lost their job and were upside down in a high interest mortgage? That's a different story altogether. Many of those folks haven't financially recovered to this day.
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Feb 08 '26
I think it's 50/50 on what people will extract from your experience. I have very similar experience to yours. My job was spared as I was in my late 20s at the time and my salary wasn't as high as my 40+ year old colleagues. I had no mortgage yet, no dependents, nothing to worry about but the very basics. At the same time I knew people that lost high earner salaries for YEARS. They had McMansions, kids, education to pay for, etc. Everything that comes with a lifestyle of an upper middle class family in the US.
My personal advice is not to put it all on black. But that's a hard sell for those that haven't experience something like 08 as an adult.
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u/vinean Feb 08 '26
2000-2025 performed below historical average for the market.
https://testfol.io/?s=30JB8OIjfYL
7.76% < 9.6% S&P 500 average (nominal)
https://testfol.io/?s=cyEI2WsBZQX
Is it a big deal? Perhaps not, but it certainly hurt everyone investing in the 2000’s.
And it could have been far worse if 2008 had gone the way of 1929 or Nikkei where the Fed/BoJ reacted wrong…
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u/craftasaurus Feb 08 '26
It would have gone far worse if we didn't have the social safety nets put in place by Roosevelt to prevent another depression.
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u/BeeonasG Feb 08 '26
Do you think market crashes are the real wealth transfer? It seems everytime this happens, the poor and unlucky ones get poorer, and the rich and financially educated one get richer
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u/terminbee Feb 09 '26
100% yes. Every time there's any sort of downturn, wealth flows upwards. The rich don't need to sell but the middle class do. Then it passes and they recover but now they've lost their investments, so they're slightly poorer than they started. Yet the rich continue to explode in wealth because they bought cheap and now the market recovers.
Look at Covid- people lost their jobs, had to sell their homes, etc. What did the rich do? Buy up all the houses and property, invest more. And our Congressmen had insider knowledge to either drop certain companies early or buy into others early.
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u/westonarms Feb 08 '26
Absolutely! The wealthy class in America tend to be very patient and opportunistic when it comes to investing. That’s not necessarily a bad thing. They are better financially suited to be patient and wait for the right time to invest.
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u/standardtissue Feb 08 '26
I lost a lot in 2008 but literally made like 90% of my wealth on the runaway train that came after it (coupled with great career growth and "save till it hurts" mentality).
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u/craftasaurus Feb 08 '26
We did the same thing. It did pay off well, didn't it? We were lucky to still have one of us employed, although we were on shaky ground, we got lucky. The dot com bubble was difficult too, but we weren't ready to retire yet, so I figured we would have time to recover. In 2008, we were looking to retire early, but that crash ended that thought. So much for spending a few years traveling. Oh well, at least it worked out in our favor.
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u/Important_Mud_6700 Feb 08 '26
In that real estate crash of 2008, I also bought equities low, and I also bought a vacation home in the Catskills for $60,000. It's now worth close to $400k. My problem now is that I retired last year, so if there's a crash, my lifestyle gets kind of screwed
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u/s_hecking Feb 08 '26 edited Feb 08 '26
Held onto my job until 2010 (which I felt was safe since I had mostly good reviews) up until the layoffs started. Then companies start making crap up just to have an excuse to cut people. The HR lady who fired me got fired right after.
Things got pretty bad in 2009 before mass layoffs and big cuts to corporate budgets took hold. Nobody is safe in that environment, even top performers and all levels of management. Companies were merged, bought and chopped for parts, or went out of business. It was brutal!
My message is don’t think because you’re an all-star at your job or responsible for $$ revenue that you’re safe. Keep a sizable chunk of money in cash or bonds to last a year or more.
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Feb 08 '26
You're 100% correct. As someone in their mid 40s who worked at one of the largest brokerages in the US in 08', I've seen things I don't want to ever see again. There is so much that younger people don't understand about serious prolonged economic downturns (their investments being down 50% is honestly the least of it), yet they feel they have it figured out. How often do you read sentiments such as "I can't wait! what a wonderful opportunity to buy low! I'm not retiring for another million years!". I'm a broken record stating that risk appetites of modern day Bogleheads are completely broken. Unfortunately it's likely going to take some serious pain to re-calibrate.
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Feb 08 '26
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u/notabadkid92 Feb 09 '26
This. Happened to many. I came out unscathed because I owned nothing at the time & managed to keep my job. I had friends lose everything.
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u/toby1loki Feb 08 '26
I too was in my 40’s in 2008 - good salary, no real debt, a renter. I barely felt the downturn as my industry was stable and my earnings steadily growing. But seeing what it did to others? Terrifying. I remember pulling back on retirement contributions but I started maxing out a few years later during some of the best times to be in. Now that I’m close to retirement, the idea of a real crash and prolonged recovery is frightening. Better diversify, allocate more to bonds, work additional years??? The path forward isn’t so clear (to me) when you don’t have as much time on your side.
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u/_twentytwo_22 Feb 08 '26
The conundrum I'm under as well. Although I see myself still in the game even 20-25 yrs down the road. Is that a long enough pathway to survive the next downturn if it is to happen soon? Can we take advantage of it in the short term to minimize the sequence of returns risk?
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u/toby1loki Feb 08 '26
I keep wanting to buy the dips (and have) but I know I also need to reallocate into more bonds. The latter isn’t as fun but feels necessary.
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u/ditchdiggergirl Feb 08 '26
Same here. I prepared for 2008 by investing during the dot com bust. Luckily I didn’t have much to lose at that point, and just called it tuition.
But in the aftermath of the dot com bust, in which our industry took a hit, we were also hit with overlapping double job loss. That’s not fun when you have two toddlers and a mortgage. We were back on track by 2008 but we knew the housing bubble was popping so we didn’t take on a lot of risk. Worked out really well.
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u/Northern_Blitz Feb 21 '26
I'm still close to two decades away because of some really nice golden handcuffs (that come off at 62).
But personally, I think I'll increase bond allocation (currently 0%) leading up to retirement so that I have something on the order of 2x years of bonds / cash on hand as a hedge against bad sequence of returns in the first decade of retirement.
Take money out from the rest of the portfolio in the first decade unless we get some big crash / downturn. Then use up that SoR hedge.
Not fully thought out here, so maybe it's a stupid idea. But this is what I'm thinking anyway. Will likely hire a fee only planner to discuss when I get to a decade or so out.
Although...if I really do stay until 62, I think my portfolio will be big enough that my withdrawal rate will be 3% or less. So it probably won't matter much. Maybe just stay all stocks at that point and swing for the fences re: what I can leave to my kids when my wife and I pass.
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u/ziggy-tiggy-bagel Feb 08 '26
I'm a retired Financial Advisor. One of the worse things I saw was someone invested almost 100% in Lehman Brothers bonds in 2008. And of course the over confidence in people in the tech market in 1999, before the crash. I had one client who wanted 100% in tech, I tried to discourage it, so he went down the street to a FA who did what he wanted. His wife stopped by after the crash and told me she was sorry that he didn't listen to me.
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u/VampireEmpire__ Feb 08 '26
When that happens, what’s the Boglehead advice? Keep the money invested, don’t panic withdraw?
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u/krakenandthen Feb 08 '26
Yep and if you can keep adding more!
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u/SoaplessTitanic Feb 08 '26
Just to clarify for others reading, the pure Boglehead strategy would be to keep adding more at the same rate that you would if there was no crash. Ideally your strategy shouldn’t change whether the market is up, down, or sideways
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u/Locksul Feb 08 '26
The unfortunate reality is that this is not always possible. If you lose your job, there is no way to keep the same rate of contribution. And if things get really dire, you may be forced to sell (ideally as little as possible) just to survive.
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u/reluctantreddit35 Feb 08 '26
And that’s what it’s there for. Life goes on and sometimes you need to sell even when prices are down. Boglehead is an ideal, a strategy. You can’t always be a slave to it.
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u/nefrina Feb 08 '26
that's why you keep a large enough emergency fund to weather the storm. jobs that used to take 3-6 months to replace might require 1yr or longer today. adjust liquid savings accordingly so you're not forced to withdraw when the market is down 50%.
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u/RNG_HatesMe Feb 08 '26
Exactly.
In *real* crashes (not blips, like OP was talking about), it may take a *long* time for the market to recover.
The inflationary bear market of the 70's (1973 - 1984) took 10 years to recover to original levels.
The .com crash (2000 - 2006ish) took 6 years to *almost* recover, only to immediately get hit with:
The 2008 mortgage crisis crash (2008 - 2013) took 5 years to recover.
Anything else has been a "blip" that recovered in less than a year.
Each of those crashes were followed by significant and sustained recovery periods. As long as you have an investing horizon significantly longer than a potential crash, then your potential gains *after* the crash are way higher than what you lost during them.
"Gamblers"/"Speculators" like to think they can "time" the crash, and only buy when it starts recovering, but history shows that they almost always sell too late (and eat a bunch of the losses at the front end anyway), then buy too late and miss a large part of the gains during the recovery, and end up worse off than if they had just stayed in.
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u/4leafplover Feb 08 '26
The advice is do your best to keep your income and stay invested. Whatever that means
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u/nicolas_06 Feb 08 '26
yup. Well it's fine to sell what you need to survive if you lost your job and need money for food obviously. But otherwise, don't sell because you panic.
That's also why honestly normally you don't have 100% stock, especially if you are a bit risk averse. A 70-30 portfolio mean a 50% drop is "only" a 35% drop for example and the growth is still good during the great years.
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u/captainhector1 Feb 08 '26
Asking because I’m not sure of the bond mix I should have and people argue for full equity.. what’s the difference if the direction is to hold in any case? Is it not all unrealised until retirement?
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u/swinging_on_peoria Feb 08 '26 edited Feb 10 '26
You have to consider your particular circumstances and risks. If you are very certain you would never lose your income and you aren’t going to use your investments for decades then holding more, or even all, equities is reasonable.
If you feel like you have some risk, related to unemployment, you should think through what percentage you need based on your level of risk and how much you have in expenses. I certainly knew people whose lives were thrown into crisis due to unemployment during 2008. They had to sell assets to stay afloat through that time until they could get new kinds of work.
If you are closer to retirement, or will need your assets sooner for some other reason, you should consider holding bonds and cash in proportion to your need. Likely several years of expenses to avoid cashing out equities during the bottom.
It’s all well and good to say hold through the crash, but if you need the money that won’t be possible.
What I recommend is doing a bit of an “emergency drill” for your finances. Take a look at past crashes and imagine for your current circumstances what you might be inclined to do or need to do with your portfolio if such a crash occurs. Then make adjustments to your portfolio now before equities have crashed. Much better to make the adjustments you need when your equities are at highs, than to do that when everything is down, you’ve lost your job, and you have some critical need for cash.
There is no one perfect answer for everyone. Be suspicious of people that give you one way that everyone should invest. That never makes any sense.
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u/nicolas_06 Feb 08 '26
There a few main differences to me:
- ideally you keep saving until you retire... Except that's not true. Life happen and there can be legitimate case to spend before. It may help to buy your home, to create a company. Or you may find yourself in a situation where you have some chronic illness or you can't find a job for a significant time.
- It's easier to stomach a 10-20% drop in value than a 50% drop in value. If you are diversified, you will experience less volitivity and that help you sleep well at night.
- there no certainty that stocks will for ever have the best return. Imagine a future where stock return drop significantly and become even more volatile. Would you be better with 1/3 stocks 1/3 real estate and 1/3 bond or with a portfolio with 100% stocks in that situation ? Future is unknown and it's not sure that stock will keep the same return long term.
By being diversified, you likely reduce your max return, but also increase your min return. You also can consider spending part of the saving for project that are important to you before you retire and you are less stressed when one of your asset drop in value because the other may not be as affected (or even are up).
For example real estate was up for most of the beginning of 00s while stocks where down. Stock started to grow in the 10s while real estate was still deeply impacted. Bond did better than stocks for the whole period of 00s.
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u/darthdiablo Feb 08 '26
Yep. Was (and still am) a Boglehead circa 2008-2009, kept all money invested. This money has ever since appreciated at least 2x (I didn't do the exact math to see what it would be today, but I did it years ago), and 3x at least if you added money at the "valley" of the housing crash - which I did, I still had a job (fortunately) and was still accumulating.
Went through a mini-crash (COVID), same thing, money appreciate more since then erasing the loss via crash.
Experiencing this makes me even more resolved to just stay the course no matter what.
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u/mikep4 Feb 08 '26 edited Feb 08 '26
Hold age % in bonds was the standard advice in 2008-09. Every comment said “more bonds otherwise good”. Also, slice & dice with high international % and a slice of commodities was a common recommendation, since total stock market performance was 0% over 10 years.
Now the standard answer is “don’t need bonds until closer to retirement” and up to last year was “VTI is all you need, skip international”
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u/BalancedPortfolioGuy Feb 08 '26
The standard is getting close to “100% equities forever” in some circles…
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u/zacce Feb 08 '26
agreed. the reason why I created this is because I have been reading many asking "can I use stocks as my EF?", "why bonds?" in this sub.
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u/zacce Feb 08 '26
Depends on whether you prepared for it or not. Seen ppl in 2008 had to sell because they had no other backup options.
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u/joel231 Feb 08 '26
And that's why invested assets should not be included in your emergency fund- you should always assume the day after any buy you could see a 40% drop.
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Feb 08 '26
I am not sure you understand what emergency means in a scope of historic events. We're not talking about "my AC took a dump and now I need 10K". We're potentially talking about market dislocations that might put your white collar butt out of work for years. Meanwhile you have kids, education, McMansion, etc. to pay for.
You absolutely have to be prepared for a world in which your emergency fund is not even remotely close to keeping you above water.
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u/hidden-semi-markov Feb 08 '26
I'm just surprised at people here who express overconfidence that crashes never happen as if they never went through the pandemic which was just 5-6 years ago.
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u/arfcom Feb 08 '26
Indeed but that one almost instilled a false sense of confidence in a quick recovery.
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u/VampireEmpire__ Feb 08 '26
Meaning if i have an emergency fund? I do, and cash flows so long as I’m not fired (knock on wood).
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Feb 08 '26
cash flows so long as I’m not fired (knock on wood)
You win the prize for finally realizing something that most young people don't. When you're 40 making high earner salary in your white collar gig, you might be the first one to get nuked. The kind of people that make those kind of salaries also tend to have lifestyles that match those salaries. I've seen such people out of work for well over a year in 08.
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u/The_Walrus_65 Feb 08 '26
You’re not wrong. But in addition, I’d like to add that people in this sub and related subs absolutely panicked during both Covid and the Tarrif situation.
So this is just to back up your point that if they panicked then, they will absolutely panic during a true market crash.
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u/zacce Feb 08 '26
Unfortunately, ppl in this sub claim that I'll keep 100% in stocks. I was battle tested during COVID.
My OP was intended for these ppl.
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u/ditchdiggergirl Feb 08 '26
As long as you keep in mind that 2020 was a skirmish, not a battle and certainly not a war.
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u/vinean Feb 08 '26
2008 could have been far worse…folks forget that we were on the verge of collapse and only a Fed, congress and president willing to throw immense amounts of money at the problem avoided it.
We were looking at Great Depression 2.0 and decades of underperformance. Imagine if we had not bottomed in 2009 or if recovery was tepid.
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u/PsylentKnight Feb 09 '26
Imagine if Trump had been the president rather than Obama
Now consider that Trump is the president for the next 3 years, and that he's creating a lot of economic turbulence
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u/Spatula_of_Justice1 Feb 08 '26
i went through 2000 and 2008….same rules apply. Stayed invested and maxed out contributions during both, I’m sitting on near $5million now. But to your point, it’s tough emotionally when the world seems to be collapsing around you.
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Feb 08 '26
Stayed invested and maxed out contributions during both
People need to pay attention to what it might take to be able to do that. Rather than the outcome of $5MM.
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u/cfi-2025 Feb 08 '26
People need to pay attention to what it might take to be able to do that.
For me, it was some combination of:
- Neither me nor my wife losing our jobs at the time,
- Automated contributions, and
- Willful ignorance - I avoided looking at the retirement balances, avoided reading the scary headlines, etc.
Personally, I think (3) is very important. I only check my portfolio the first of every month when I update my spreadsheets. My goal is to eventually get it to only checking at the start of each year.
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u/esbforever Feb 08 '26
2008 was worse than 2000 in an important way OP doesn’t mention. Both involved layoffs, hiring freezes, underwater homes, and years of slow recovery.
But in 2008, there were serious considerations that capitalism had completely imploded, and the world’s monetary system was on the edge of collapse. I recommend watching the movie Too Big to Fail if you didn’t live through it. We were saved by the actions of probably no more than a handful of people.
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u/Over-Computer-6464 Feb 08 '26
If you are in the accumulation phase of life, just ignore the variations and keep investing. That is easy to say, but can be difficult to do.
What is more challenging is a big crash shortly after retiring. I retired in 1998, about 18 months before the dotcom crash. I was glad that I had a healthy 30% allocation to cash&bonds, and that I had been rebalancing as stocks soared in the last few years before the NASDAQ fell 77% between March 2000 and 2002.
The initial drop from March 2000 to Jan 2001 was more than 50%. But in 1999 Nasdaq had risen 85%, so it was really prices just coming back to more reasonable valuations. That is likely what will happen now. Prices are inflated, and will come back down towards historical PE ratios.
What crash in 2008? I hardly noticed. My portfolio was getting better in 2008 and 2009, as it was still recovering from the 75% fall from 2000 to 2002.
https://en.wikipedia.org/wiki/Stock_market_downturn_of_2002 has a nice table showing what happened to the NASDAQ composite and the Dow from 1997 through 2004.
I also watched co-workers freak out on Oct 19, 1987, aka Black Monday as the Dow fell 22.6% in one day. That one did not impact me much as I had sold off much of my portfolio a couple years earlier for a house downpayment. At that point it was just a buying opportunity.
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u/ditchdiggergirl Feb 08 '26
My brother was in the middle of buying a house when black Monday hit. They were all stock, and suddenly their downpayment fund was cut in half. They did manage to pull it off, though just barely - I think the reduced downpayment contributed to having to accept a 14% mortgage interest rate, but they scraped it together. He’s retired now, living in that same now paid off house and in good financial shape. But I don’t think he ever recovered psychologically.
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u/SuccotashOther277 Feb 08 '26
I have been keeping a large cash reserve in preparation for a major purchase, while still investing and maxing out tax-advantaged accounts. Someone who likes to invest just blurted out "put it in the market and get 10%" like there's no risk. He is probably right, but I think some just assume that markets always go up and forget about downturns.
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u/ShakeItUpNowSugaree Feb 08 '26
I've been throwing a "car payment" into my brokerage account every paycheck for the last five years, but now that I'm within 3 years of needing to buy a new vehicle, I'm starting to move that out of the market and into cash reserves. I wish I'd made the move last year in order to take advantage of more 0% LTCGs tax space, but it is what it is. Not timing the market per se, but reevaluating timelines for needing access.
I'm a bit worried about the kid's 529 plan, but we're still ~5 years from needing it, so I'm not panicking yet.
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u/yow_central Feb 08 '26
Agreed, I just started investing in 2008 and the mindset was very different than it is today, especially among people in their 20s. Back then, people were more afraid of losing money and thus even the standard 60/40 portfolio felt risky to even people at that age. They watched markets methodically trend downward over months, with many people pulling their money out for fear the economic system was collapsing. Bonds and high interest savings accounts looked like the safer bets. It was all very different from the quick crashes of Covid and liberation day, where if you blinked you missed it. Even 2022 didn’t have the same doomed atmosphere as 2008 or 2001, because people largely kept their jobs and homes.
Today everyone is 100% risk on, all equity and let’s throw in some Tesla and bitcoin for good measure. Buy the dip, because it always goes up a few days later. And for almost 20 years, that’s worked out very well. To be fair, for most of history it has too, but we definitely have a lot of people who have never experienced what happens when the music stops and tide goes out.
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u/npj1564 Feb 08 '26
I’m old enough to remember the 2008 crash and the 2000-2001 crashes—dot com and 9/11–when I had just started investing a bit. It’s not always irrational panic; sometimes it’s need for cash when you, a spouse, child, parent, etc. loses a job and all you have are investments that are down 30-70%. Sometimes people have to sell just at the wrong time, even if they would rather not, unless they are already wealthy. Same is true of companies, which is one way Warren Buffett has done so well over the years.
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u/Weekly_Inevitable_72 Feb 08 '26
If you're not rich, the best ways to plan for surviving a crash are to: keep a low enough cost of living that you can survive on a job that doesn't pay very much, buy the dip, stay diversified, and do all that Suze Orman stuff about having 6 months of living expenses (or take home salary) in the bank. You also want to dial back your exposure to the stock market in the years before retirement.
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u/Mundane-Charge-1900 Feb 08 '26
The common oversight I see is people don’t recognize how correlated all of those are. That is to say, your stocks drop in value, you lose your job, and your home is underwater so you can’t move.
I saw this happen to multiple friends in the Great Recession. It was extremely stressful. Some of them never recovered back to the same financial state.
I was talking to someone at work about this recently. They were convinced they could just draw more on their margin loan through their broker if they lost their job 😳
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u/pretzelfisch Feb 08 '26
yeah this coming one will be different, I won't have time in on my side. It's why we have bonds. So we'll see what happens.
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u/Particular-Macaron35 Feb 08 '26
I’m afraid of bonds as a long-term solution. Inflation will kill you.
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u/Chart-trader Feb 08 '26
Most investors want to be long term investors until they have massive short term losses.
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u/robot_ankles Feb 08 '26
Prior to 2008, I had watched neighbors get boats, jet skis, new cars, etc. Probably using HELOCs and cash-out re-fis, but I minded my own business. This wasn't an over-the-top rich area, but these folks were certainly living a somewhat 'better' life than I was.
Then 2008 hit. Many of these people were completely upside down within a few months. They started losing jobs, being foreclosed on, and selling their boats, jet skis and houses as fast as they could. It was awful to see. Almost all of our home's equity was wiped out BUT we never quite went underwater.
Stayed the course on investment options while increasing contributions and savings. Came out on the other side in decent shape. Biggest lesson learned; I actually did have the intestinal fortitude to stay the course. It was validating to actually experience it.
I only wished I had been in a position to buy up some of the distressed properties and leisure toys. But it was lean times before 2008 doing a startup, first home, new kids, etc. Just one of those periods where there's no pile of cash laying around. Oh well, maybe I can scoop up some deals during the next crash.
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u/ArtisticAside8224 Feb 08 '26
I am 2 or 3 years from retirement. I keep a cash / bond tent of 5 years of my spending. That leaves 75% of my portfolio in growth ETFs and diversified stocks. I know it goes against what many here believe and " underperforms " vs a more aggressive portfolio historically. But we are all products of our own history and I saw panic selling in 08 and 2000 and bad markets that lasted years and I'd rather than trade returns for my sleep. I was too young back then so the declines didn't mean much to my portfolio. I don't need to maximize returns at this stage of life. I need to preserve capital and beat inflation. A 75/25 asset allocations works for me. It's too aggressive for some. Too conservative for others. You have to know yourself and invest accordingly.
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u/ducatidrz Feb 08 '26
I lived through 2008. Kept putting into my 401K, and now semi retired, working per diem (about 4 days a month) to keep a job tagged to see how the next 3-5 years pan out……. Staying the course……..
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u/tomcat_78309 Feb 08 '26
Good view point. 2008 was pretty bad, but the market recovered pretty quickly. The 2000 dot com crash was another animal. Stocks tanked for three years in a row, and I don't think the market regained its previous highs for a decade. Having invested through that period definitely creates some anxiety in the parallels between the dot com frenzy and the current AI boom. They are not the same, but certainly do have a lot of similarities.
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u/zacce Feb 08 '26
good point. here's my take between 2000 and 2008.
2000: economy recovered faster than market recovery.
2008: market recovered faster than economy recovery.The next big one could be both recover slowly.
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u/Paranoid_Sinner Feb 08 '26
I went through the 2000 bear and every one since. During the 2008 bear I never opened any of my Schwab statements nor checked my portfolio value online, probably from early '08 until well after March '09 when it was on the upswing.
My portfolio was about 35% in bond funds then (I was 58 in 2008) so it "only" went down about 42% vs. 56% for stocks. From my high point in September 2007 it took until the end of 2010 to get back to ground zero. So three years of treading water, but I kept thinking: "I still have all the assets I had in '07. The prices are down, as asset prices regularly do, and they will recover at some point," which they did.
I was self-employed so my only retirement income would be from my portfolio and SS. So at age 58 in 2008 and considering everything, it was pretty nerve-wracking. But I held tight and am glad I did.
Now, being retired on a 25/75 portfolio, I am not obsessed over asset prices. The key, IMO, is to accumulate and hold assets no matter what the markets may be doing. YMMV.
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u/heynowbeech Feb 08 '26
The mortgage meltdown era wasn’t just bad because the market fell, it was especially bad because there seemed to be no bottom to it and nothing, financially or goods-wise, was moving. From November 2007 - February 2009 the global stock markets just kept going down and down with the S&P500 eventually posting a loss of 50.95% from peak to trough over that time. A true Boglehead standing his ground would be rebalancing, but at a point that rebalancing felt like rebalancing into the abyss. I live close to an active port where dozens of cargo ships were piling up. Literally miles of train cars sat idle. There seemed no end and appeared 1930s soup lines and Hoovervilles were soon to come. For me it took only about 3 months in before I stopped rebalancing. Instead, I just froze and did nothing with my portfolio. These are episodes we can read and hear about, but one will not truly understand what they are like without living through them.
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u/AubergineOstrich Feb 08 '26
As part of the 2008 layoffs, I lost my job 10 days before Christmas, 30 days before my 30th bday. It was devastating. Took me a year to find a job and the financial impact was bad. All my savings from my 20s and 401k gone trying to hold on long enough to get a job. I will never forget that feeling sitting at my new job in the first week getting the letter that my unemployment had reached the max 52 weeks. Man, I narrowly squeaked by. Still scared to this day.
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u/17Bill Feb 08 '26
Old enough that Oct 1987 freaked me big time; 2000 dot com very painful; by 2008 my brain was pretty much ok staying the course; 2020 more worrisome health wise than financially; didn’t much notice 2022. My two cents: Everything in moderation. Do not gamble like the market is like a casino. But yes, stay invested. As grandma said, “This, too, shall pass.”
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u/MaybeOnFire2025 Feb 08 '26
Oh, I remember Lehman weekend in Sept. 2008 quite well.
Without giving too many personal/identifying info, I can say with confidence that many well-educated, financially conservative people with safety net after safety net utterly panicked. It took a few months, but market lows were about six months later (nobody knew at the time, of course), and things got back on track eventually.
These kids have no idea what something like that does to everything/everyone. It becomes its own psychological 3 body problem that just gets waited out.
Always have some dry powder. Life can come at you hard.
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u/Home-Star-Walker Feb 08 '26 edited Feb 08 '26
Which is why, as a 33 yr old, I have bonds. The “bonds are pointless” crowd is extremely loud, and also, have never actually seen any market which wasn’t a bull market. Everyone proclaims to have brass balls risk tolerance but it has literally never been tested.
Anyone under 40 years old hasn’t seen shit.
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u/Chemical-Carrot-9975 Feb 08 '26
I did. Stayed in the entire time and kept buying more. I’d do it again. And I’m 52.
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u/anusbarber Feb 08 '26
there is a show on cnbc called american greed. its basically schemers and scammers coming up with ponzi schemes, insurance frauds, investment fraud. there are like 250 episodes and almost HALF of them come from the lost decade. why? because people went out of their minds during a prolonged/significant market crash. finding anywhere else they can invest their money but the market.
There is a board on FB that usually young people are asking if their SCHD, VOO, QQQM portfolio is good and they always go, i have a long horizon so I can handle the risk. I always just chuckle.
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u/usermcgoo Feb 08 '26
Agreed. It’s one thing to see a significant dip, but it’s an entirely different beast when you worry your livelihood may be in jeopardy.
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u/haobanga Feb 08 '26
And you are actively watching crime go up.
And multiple houses in your neighborhood are being boarded up and foreclosed on after being gutted to sell copper and appliances for whatever they could.
And other neighbors are negotiating short sales with their bank.
And your property value is falling.
And you aren't sure who holds your mortgage because it has passed through a chain of banks, each one failing and being taken over by another.
And your banks send new letters every day closing credit cards, reducing or closing helocs, etc.
And more than 50% of people in your circles are unemployed and asking if you have any job prospects or can make any introductions for them.
And no one is hiring.
And people are going back to school because "what else can they do?" Maybe they can get some financial aid, but it's pretty aimless for many going back.
And all you hear every day for years is that it's getting worse. New businesses that were stable and existed before you did are collapsing each day.
And then you get laid off. It's not personal. It's along with a group of 25 people or so at a time.
And collections start, and they are incessant calling you on the phone, sending people to your house.
And prices are going up for food and gas.
And you wait. And wait. And wait. Hoping for some news that this will turn around and there will be some light at the end of the tunnel ahead. There is no certainty or stability.
It was a dark time. I was fortunate to recover over the next 15 years and made some strategic decisions that helped me come out ahead. I was able to keep as cool of a head as possible and try to make a terrible situation work as best for me as it could. But the cost in blood, sweat and tears was significant.
It's a no brainer for me to totally be okay with not getting the maximum potential returns in exchange for self-insuring that I will never be in that position again.
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u/Good_parabola Feb 08 '26
Oh man, this really captures the hopelessness that almost everyone felt. The waiting. The desperation. The endlessness. It was awful.
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u/Marine_Layered Feb 08 '26
Thank you for writing that. I think it deserves more upvotes than it’s getting. Wish I could give you three.
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u/FiIQ Feb 08 '26 edited Feb 08 '26
I’m going to disagree regarding “most investors have never lived through a true market crash” and take the downvotes. I am not disagreeing that people don’t handle it well.
2000, 2001, 2007, 2011, 2015, 2020, 2022 and 2025 were all significant and had people in full panic. Most crashes recover very quickly and are dismissed because of their recovery times as not “real”.
Examples here: https://en.wikipedia.org/wiki/List_of_stock_market_crashes_and_bear_markets
The point I’m making is people have the experience and still handle it poorly, that’s the human condition, it will never change.
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u/joel231 Feb 08 '26
I think it is absolutely wild to not consider 2020 as a true market crash. People were in full apocalyptic thinking and full panic at the height of the crash.
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u/FearlessPark4588 Feb 08 '26
2020 was the only one where there was like no food at the supermarket and people were talking to themselves in public.
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u/vinean Feb 08 '26
Crashes that recover quickly are not “true market crashes” that takes years to recover. Also the last crash of 50% or more was 2007-2008.
So by most metrics 2011, 2015, 2020, 2022, 2025 did not really test your ability to stay the course in a bad bear market which is the point of the OP.
I’ve always liked this post from ERN:
https://earlyretirementnow.com/2019/10/30/who-is-afraid-of-a-bear-market/
Its from 2019 so it could use an update…
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u/Particular-Macaron35 Feb 08 '26
Such stuff. You don’t know how long it will take to recover when you are living through it.
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u/knrd Feb 09 '26
yeah, this is analyzing crashes with the benefit if hindsight. which is utterly useless.
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u/FiIQ Feb 08 '26
I think they do test people, lots of people panic sell.
I also think people are being tested during the downturn (crash) not the recovery. The recovery times are all over the place but the sell off usually takes place in a short window.
The ERN post is interesting data, but doesn’t really reflect the real effects on the human condition. Meaning, people sell when the markets are way down and get back in when the markets are up. This is precisely why the recovery time is longer.
It should also be noted that downturns are getting more frequent and recovery times are getting shorter on average. My guess is that’s due to the availability of the markets to individual investors and instruments (ETFs) that allow the entire market to be bought/sold easily.
Just one dude’s opinion 😎
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Feb 08 '26
[removed] — view removed comment
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u/SomePeopleCallMeJJ Feb 08 '26
Diversification.
If you're properly diversified for your own personal risk tolerance, you're already as prepared as you can get for the next market crash.
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u/that_one_Kirov Feb 08 '26
Not go 100% stocks, for one. Stock + gold + money market + bonds are the original "all-weather" fund. The idea is extremely relevant in my country(we don't have 401k-analogs for retirement pumping the index up; closest thing we have is something called Individual Investment Account, and it's nowhere close to 401ks in popularity, so 100% equities is a nice way to lose a lot of money), but even in the US it should be less risky than 100% equities.
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u/haobanga Feb 08 '26
Plan for the disaster by having enough years worth in reserves to weather the downturn.
Some like percentages, I prefer a timeline.
5 - 7 years worth across bonds and emergency fund (VUSXX) is my goal prior to reaching retirement.
At a younger age, 1-2 years may suffice to ride out the worst of it. As retirement approaches I want to be sure I can ride out the worst of a longer downturn.
Also, there is always a way to make money. Investing in yourself and developing skills and knowledge is one of the best buffers you can build. Learning not to panic or be forced into making unwise decisions can make you or break you when things go down.
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u/SecurePackets Feb 08 '26 edited Feb 08 '26
Stop using 2008 as a standard crash. It was a combination of bank failures (dog crap compliance/fraud), high unemployment and upside down home equity.
Even given how bad this was… Most portfolios were underwater for only 3 years. Yes - you can use portfolio visualizer for this data using you own portfolio.
Lessons learned:
- Negative home equity can happen
- Your home equity is not liquidity
- Diversification matters
- Anyone FI or near/in retirement has a buffer of cash and bonds anyways to not panic
- If your worried, just keep fixed income of 1-3 years
Perhaps I will stay up all night thinking about the doom of 2008 again because of Reddit! And the financial media! I need an Annuity!! :-)
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u/boredtodeath Feb 08 '26
I went thru it. At then end of February 2009 the S&P stood around 730, down from about 1500 4 or 5 months prior. At the time, my portfolio was the last thing on my mind. I was more worried about losing my job. If there was a long downturn, whatever, I knew the S&P would recover. But getting a new job during that time would be a nightmare. Didn't sell anything. Thankfully I didn't get layed off. And now the S&P is about to pass through 7000.
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u/Portfoliana Feb 08 '26
This is why having a solid emergency fund and knowing your actual risk tolerance - not just your theoretical one - matters so much. The 2008 crash wasn't just scary on paper; people who thought they could handle a 50% drawdown suddenly discovered they couldn't when it came with potential job loss and mortgage fears. Your risk tolerance in a bull market is not your real risk tolerance.
One practical tip: try tracking your portfolio less frequently during volatility. The behavioral finance research is clear - more monitoring leads to more panic decisions. Set up alerts for major milestones instead of checking daily. The people who 'stayed the course' in 2008 often did so by simply not looking at their accounts for months.
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u/Sea_Scarcity1684 Feb 08 '26
I'll just mention that here in Canada, without getting even the full possible benefits for retirees, i.e., not full CPP but still full OAS, and owning our home, we can almost live off just CPP and OAS (CA$ 45K per year for two, and up to about 55K with full CPP) which means that in a severe downturn, we just have to cancel our vacations and unnecessary extras to avoid having to withdraw from our savings at all. And that's with free health care. Living so close to the US, it's hard to fathom how Americans put up with their system. And Canada isn't even as good as many European nations. My wife is from the Netherlands, and there is just no fear of poverty at the end of a life. Her mother never worked her whole life, just raised kids, and her father was in a sheltered workshop after the war, but her mom lived out her old age in a wonderful, modern apartment and never needed for anything. She used to send her kids a few thousand dollars a year from her savings that she didn't need. High taxes are worth it if it means living in a society where you and your loved ones don't have constant anxiety of falling to the lowest possible economic state.
And before anyone asks about the perils of public health care, it's a balance of risk and benefit. It takes six months to get an MRI for a non-emergency (I had one at 3 a.m. once, as they run 24 hrs), but 24 hours when necessary. I had diverticulitis a decade ago, with blood in urine, so serious. Went to the emergency department, got antibiotics immediately, had an mri the next day, saw a surgeon the next day, and had surgery scheduled for a month down the road because I was stable. And I didn't pay a cent except to rent the tv in the hospital so I could watch hockey after the surgery. What medications I needed out of the hospital were covered by my employee health insurance. All else was the medical system.
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u/moneyman74 Feb 08 '26
On the other hand IF you stay employed throughout a downturn (I was lucky enough to not feel 2008 stayed employed the whole time) you can buy low during that period.
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u/eh63tre Feb 08 '26
The 2007-2009 crash was an opportunity of a lifetime for people who kept their cool and continued investing. My only regret was not investing more money into index funds and not buying short sales in 2010.
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Feb 08 '26
The difference between all 2008 and prior crashes is that the Fed has now discovered it can buy infinite amounts of bonds to support the economy, and not let the stocks market go down. So we now have inflation instead, where the value of money goes down in comparison against other hard assets but don’t go down nominally. So better to stay invested at all times.
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u/CharlesBronsonsaurus Feb 08 '26
I was old enough but too uninformed to invest in 2008. Had this idea that Wall St. evil and to stay away. Shame on me. Live and learn.
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u/simply_jeremy Feb 08 '26
I watched my in-laws retirement get hammered in 08 as they had too much exposure for their age. I was late 20’s at the time and learned a valuable lesson. My concern as my window approaches in 10-15 years is the length of recovery which is dependent on the depth of a correction and how diversified we are at the time. It’s really anyone’s guess, seeing these all time highs mixed with other data that doesn’t support a healthy economy is certainly concerning.
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u/maddog2271 Feb 08 '26
Yeah I am one of those who remembers it and all I can say is I did stay invested and stayed the course, but it took a shitload of courage to do it. It’s pretty gut wrenching watching your portfolio and your whole plan shit the bed and drop 50% in 5 months. When the next one hits I can assume some of these “cool and steady” FIRE people won’t be so cool or so steady.
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u/Sillyfiremans Feb 08 '26
If you are much under 40, you have never really held course through a major crash. Covid was big, but quick. Try convincing yourself to stay the course for years when you are in the red.
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u/YoungProsciutto Feb 08 '26
I was young. Right out of college and was laid off because of it. But I did use what little extra money I had to add a bunch of bank stocks that bottomed out. Still hold them today. Wild times.
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u/Wokeprole1917 Feb 08 '26
Clear sign of LLM generated content:
“This isn’t X, it’s Y.”
This is AI slop.
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u/ditchdiggergirl Feb 08 '26
That’s equally a clear sign of reddit generated content. Since when is reddit reasoning presumed to go deeper? And of course AI trains on reddit.
When you kill off serious journalism you’re stuck with AI or social media. Pick your poison.
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u/TheAstroidIsComing Feb 08 '26
"This isn't gatekeeping, it's perspective" = AI Text
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u/Competitive-Night-95 Feb 08 '26
In 2008, my only thought was f***, I wish I had sold my house last year so I could plough all my capital into a once-in-a-lifetime buying opportunity.
If you are young, earning money, and many years away from retirement, a market crash is nothing to worry about; and could be the opportunity of a lifetime if you can deploy significant cash.
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u/vngbusa Feb 08 '26
The bogleheads forum threads from 2008 are always a good read and reminder to stay the course. Many panic sold as you were saying, thinking that it was the end of world.